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Do venture capital-driven top management changes enhance corporate innovation in private firms?

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  • Yu, Qianqian

Abstract

Using hand-collected data from Form Ds on executives in venture capital (VC)-backed private firms, I show that VC-driven top management changes lead to a significantly greater quantity and quality of innovation, which potentially occurs through new management teams hiring more and higher quality inventors. My evidence demonstrates that both founder replacements and non-founder management changes are associated with enhanced innovation. Further, adding top managers with general managerial skills enhances innovation, whereas changing managers with a prior technical background does not. Finally, top management changes lead to the adoption of an exploitative (rather than explorative) innovation search strategy by private firms.

Suggested Citation

  • Yu, Qianqian, 2025. "Do venture capital-driven top management changes enhance corporate innovation in private firms?," Journal of Banking & Finance, Elsevier, vol. 171(C).
    • Handle: RePEc:eee:jbfina:v:171:y:2025:i:c:s037842662400267x
    DOI: 10.1016/j.jbankfin.2024.107353
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    More about this item

    Keywords

    Entrepreneurial finance; Corporate innovation; Private firms; Venture capital; Top management changes; Inventor mobility; Innovation search strategy;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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