Does the technology background of the Party Committee Secretary affect firm’s innovation efficiency? Evidence from listed state-owned enterprises in China

ABSTRACT

With the increasing emphasis of the government on the importance of Party organisations in China’s state-owned enterprises (SOEs), we need to pay more attention to its role in the operation of enterprises. As the research on board of directors emphasises the central position of the chairman, this paper focuses on the top leader of the Party organisation, namely the Party Committee Secretary. Based on upper echelon theory, this paper proposes the relationship between the technology background of a Party Committee Secretary and firm’s innovation efficiency, and how this relationship is moderated by position duality and environment dynamism. Using the data of China’s listed SOEs which issue A-shares in Shenzhen and Shanghai stock exchanges from 2014 to 2016 and operate in the manufacturing industry, the main effect and moderating effects are tested. We find that the existence of a Party Committee Secretary with technology background positively affects the SOE’s innovation efficiency. In addition, this relationship is strengthened by environment dynamism. Our conclusions not only enrich literature about upper echelon theory and determinants of firm’s innovation, but also are helpful for improving corporate governance in developing countries.