Top Managers’ Involvement in Inventive Activities and Firms’ Performance

Positioned at the intersections between the orchestrating resources theory and top managers’ human capital perspective, our study investigates the relationship between top managers’ involvement in inventive activities, technological knowledge breadth, and firms’ performance as measured by Tobin’s q and Default probability. Using longitudinal data drawn from 2,363 China A-share market firms from 2009 to 2018, we find that top managers’ involvement in inventive activities has a positive effect on Tobin’s q, while reducing a firm’s Default probability. Such an effect is moderated by top managers’ technological knowledge breadth. Mechanism tests indicate that managers’ involvement in inventive activities promotes Tobin’s q through enhancing innovations’ quality and greater stock market visibility, while reducing Default probability through greater stock market visibility. Our results explicitly address managers’ actions related to firm innovative resources stock and their contribution to firms’ performance. Implications for firms and policymakers are also proposed.