Risk culture in corporate innovation

In this study, we utilize stock market beta to examine the impact of corporate risk culture on innovation within U.S. firms. Our results reveal that firms with a pronounced high-risk culture invest more in innovation and generate greater innovation outcomes. These firms tend to employ overconfident or generalist managers and offer them incentive compensation to spur innovation. Further analysis underscores that the influence of risk culture on innovation occurs predominantly in innovative industries. Our findings highlight that firms with a high-risk culture excel in seizing innovative growth opportunities.

Automated summary

This study examines the impact of corporate risk culture on innovation in U.S. firms using stock market beta. The results suggest that firms with a prominent high-risk culture tend to invest more in innovation and achieve greater innovation outcomes. These firms usually employ overconfident or generalist managers and provide them with incentive compensation to promote innovation. Further analysis shows that the influence of risk culture on innovation is particularly prominent in innovative industries. The findings highlight the advantage of firms with a high-risk culture in seizing innovative growth opportunities.