Performance Expectations, Ownership Identity, Risk and Innovation in Different Institutional Environments

The idea that innovation is an important source of economic growth dates back to the introduction of the Schumpeterian theory of economic development. Ever since, scholars have accumulated stocks of knowledge about determinants of innovation in a number of review papers. Despite the fact that the existing research on innovation has looked into the antecedents, effects, influential moderators and types of innovation, there still remain important gaps that need to be addressed. One important omission refers to the widely held assumption of scholars that innovation is the same as risk, due to its inherently risky nature. A systematic review of the existing research on the topic of risk in the field of strategic management, further reveals that very few studies distinguish between either constructs or attempt to study them simultaneously in an empirical setting. Additionally, current work on both risk and innovation analyzes each of these constructs in the context of advanced economies. Because the applicability of fundamental mechanisms and models originating in developed economies to the context of emerging economies has been previously questioned, the understanding of the nature of the relationship between risk and innovation is incomplete without the consideration of the impact of institutional factors. This study addresses several research questions in regard to the intersection between antecedents of innovation, innovation and the institutional environment. Using prospect theory and agency theory perspectives I explore the role of risk as an antecedent to innovation as well as the moderating effects of three institutional environment factors on the relationship between risk and innovation: pro-market vs. pro-social orientation, efficiency of the legal and political environment, and the strength of minority investor protection. I further examine the relationship between performance expectation and ownership identity, and innovation in the context of different institutional environments.

Many thanks to Irina’s Defense committee: Committee Chair: V. K. Narayanan, Ph.D. Deloitte Touche Jones Stubbs Professor of Management, Associate Dean for Research Committee Member: Haemin Park, Ph.D. Assistant Professor of Management Committee Member: Konstantios Serfes, Ph.D. Professor of Economics Committee Member: Samuel Szewzcyk, Ph.D. Associate Professor of Finance Committee Member: Hubert Glover, Ph.D. Associate Clinical Professor of Accounting