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How do executive excess compensation affect enterprise technological innovation: Evidence from a panel threshold model of chinese biopharmaceutical companies

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  • Xu, Yong
  • Ji, Junzhe
  • Li, Nicolas
  • Borah, Dhruba
Abstract
This study examines the levels of executive excess compensation (EEC) that stimulate the quality and efficiency of enterprise technology innovation (ETI). Using a behavioral agency perspective, we investigate how companies achieve superior ETI by providing sufficient incentives to motivate executives to perform to the best of their abilities. We use a panel threshold model based on a sample of Chinese-listed biopharmaceutical companies and find that: (1) providing an EEC between 0.0592 and 0.1907 significantly affects the promotion of ETI quality; (2) regarding ETI efficiency, executives generally do not receive the compensation that they deserve; and (3) the existing EEC has a weak negative impact on ETI efficiency, gradually disappearing as compensation increases. Heterogeneity analysis reveals that restricting EEC to the eastern area and strengthening the supervision of EEC in state-owned enterprises are effective measures for stimulating ETI. We advance the literature by providing guidance on compensation plans to companies in different regions.

Suggested Citation

  • Xu, Yong & Ji, Junzhe & Li, Nicolas & Borah, Dhruba, 2024. "How do executive excess compensation affect enterprise technological innovation: Evidence from a panel threshold model of chinese biopharmaceutical companies," Journal of Business Research, Elsevier, vol. 179(C).
    • Handle: RePEc:eee:jbrese:v:179:y:2024:i:c:s0148296324001875
    DOI: 10.1016/j.jbusres.2024.114683
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