Top Management Team Quality and Innovation in Venture-Backed Private Firms and IPO Market Rewards to Innovative Activity

Chemmanur, Thomas J; Gupta, Manish; Simonyan, Karen

Abstract

Using hand-collected data on top management team human capital (“top management quality”) of a large venture-backed private firm sample, we analyze the relation between top management team quality and pre-initial public offering (IPO) innovation productivity and the relation between pre-IPO innovation productivity and IPO market valuations. We hypothesize that firms with higher quality top management teams invest more in innovative projects and select better projects, yielding higher innovation productivity; pursue explorative rather than exploitative innovation strategies; and hire more high quality inventors. Finally, we hypothesize that IPO market rewards more innovative private firms with higher IPO firm valuations. The evidence supports these hypotheses.

Citation

Chemmanur, T. J., Gupta, M., & Simonyan, K. (2020). Top Management Team Quality and Innovation in Venture-Backed Private Firms and IPO Market Rewards to Innovative Activity. Entrepreneurship Theory and Practice, https://doi.org/10.1177/1042258720918827

• Journal Article Type: Article
• Acceptance Date: Mar 11, 2020
• Online Publication Date: Apr 23, 2020
• Publication Date: Apr 23, 2020
• Deposit Date: Oct 6, 2020
• Publicly Available Date: Oct 14, 2020
• Journal: Entrepreneurship Theory and Practice
• Print ISSN: 1042-2587
• Electronic ISSN: 1540-6520
• Publisher: SAGE Publications
• Peer Reviewed: Peer Reviewed
• DOI: https://doi.org/10.1177/1042258720918827
• Public URL: https://nottingham-repository.worktribe.com/output/1402140
• Publisher URL: https://journals.sagepub.com/doi/10.1177/1042258720918827