Returnee Executives and Enterprise Innovation: From the Perspective of Cultural Convergence

Gan Weiyu; Liu Man

doi:doi:10.16538/j.cnki.jsufe.2022.01.007

Summary

Based on the data of Chinese A-listed companies from 2011 to 2017, taking overseas experience as the agent of the cultural characteristics of executives, this paper explores the impact of the overseas background of the executive team on enterprise innovation from a cultural perspective. The study finds that overseas experience is a process in which executives “contact, adapt and integrate” western individualistic culture. The value cognition system of returnee executives has implanted more individualistic cultural factors, so they may show stronger willingness and ability to innovate. Specifically, the greater the proportion of returnee executives in the team, the higher the intensity of enterprise innovation investment. In addition, this relationship shows differences with different corporate situations. It is found that the rich financial slack in enterprises can not only provide resource support for the innovation decision-making of returnee executives, but also ease the sensitivity of executives to the risk of innovation projects. Management equity incentive can not only relieve the risk aversion of local executives and make it easier to form a synergistic effect with the innovation of returnee executives, but also further stimulate the risk-taking level of the whole TMT and promote innovation. Empirical test results show that, the more reconfigurable financial slack resources the enterprise has, and the higher the shareholding ratio of executives is, the more returnee executives can promote enterprise innovation. The mediating effect test shows that returnee executives promote innovation by improving the risk characteristics and self-confidence of the executive team. Further research finds that returnee executives increase enterprise invention patent applications which are partly achieved through increased investment in innovation. Finally, this paper distinguishes the overseas experience of executives. The study finds that overseas work experience can promote enterprise innovation more than overseas study experience. Meanwhile, executives with overseas study and work experience have a significantly stronger impact on enterprise innovation than executives with only a single overseas experience. This shows that the positive impact of executives’ overseas background on innovation may also have the corresponding characteristics of cultural scenes. That is, there is a cultural migration of overseas work scene to domestic work scene. From the perspective of cultural convergence, this paper expands the understanding of the internal logic and function boundary of the innovation decision-making of returnee executives, and also provides empirical evidence at the micro enterprise level for reasonably evaluating the actual effect of national policies such as government-sponsored overseas study and top-level talent introduction programs.