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Horizon problem and firm innovation: The influence of CEO career horizon, exploitation and exploration on breakthrough innovations

Cho, SY and SK Kim (2017). Horizon problem and firm innovation: The influence of CEO career horizon, exploitation and exploration on breakthrough innovations, Research Policy, 46(10): 1801-1809.

Building on labor market evaluations and legacy conservation motivation perspectives, we propose a mechanism to explain the relationship between CEO career horizons and breakthrough innovations. Using 10-year panel data from 681 U.S. firms, we find that firms that have a CEO with a short career horizon tend to produce fewer breakthrough innovations.

We also find that the relationship between CEO career horizon and breakthrough innovation is partially mediated by R&D spending, and also moderated by organizational learning behavior (exploration vs. exploitation). This study highlights how a CEO's motivation to protect success in the short term affects the firm's innovativeness.

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