The Impact of Stakeholder Orientation on Innovation: Evidence from a Natural Experiment

Flammer, C and Kacperczyk, O (2016) The Impact of Stakeholder Orientation on Innovation: Evidence from a Natural Experiment. Management Science, 62 (7). pp. 1982-2001. ISSN 0025-1909


In this study, we assess the causal impact of stakeholder orientation on innovation. To obtain exogenous variation in stakeholder orientation, we exploit the enactment of state-level constituency statutes, which allow directors to consider stakeholders’ interests when making business decisions. Using a difference-in-differences methodology, we find that the enactment of constituency statutes leads to a significant increase in the number of patents and citations per patent. We further argue and provide evidence suggesting that stakeholder orientation sparks innovation by encouraging experimentation and enhancing employees’ innovative productivity. Finally, we find that the positive effect of stakeholder orientation on innovation is larger in consumer-focused and less eco-friendly industries.

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Item Type: Article
Subject Areas: Strategy and Entrepreneurship
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© 2015 INFORMS

Date Deposited: 17 Jan 2017 12:28
Subjects: Technological innovation
Last Modified: 14 Apr 2024 01:27
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