Serve the State or Serve Myself: State Ownership, CEO’s Political Experience and Firm Innovation

Prior studies provided mixed results and different standpoints of the impact of state ownership on firms’ innovation. To reconcile this tension, we propose a contingency-agency model and theorize that state ownership may promote exploitative innovation but hinder exploratory innovation due to the agency duty. Moreover, we theorize that if the CEO has served as a national- or provincial-level position, the negative relationship of state ownership and exploration will be attenuated and if the CEO has served as a municipal- and county-level position, the positive relationship of state ownership and exploitation will be enhanced because CEO’s political experience may imprint on a distinct state-oriented ideology. Working in an environment consistent with the orthodox state-oriented ideology—such as a state-owned enterprise within a state-monopolistic industry—maintains and even intensifies the imprinting ideology. Our research reveals the light side of political ideology by demonstrating that the CEO’s state-oriented ideology may benefit SOEs’ exploratory innovation. We examine our hypotheses based on a longitudinal panel data of 519 Chinese firms from 2008 to 2017.