Professor Haizheng Li and School of Economics alumna Jing Xu published "Managerial Human Capital and Corporate R&D Investment" in the Journal of Economic Behavior and Organization. They write:
This paper discusses how the human capital of a firm's leadership would influence its R&D investment decision. The human capital of a leadership team is measured by leaders' past experiences — for example, their education, occupation, etc. Given their crucial roles in corporate decisions, we consider the human capital of both the CEO and the board of directors (BOD). The interplay of CEO and BOD is also considered since their conflict opinion/consensus, smooth collaboration, etc., would all affect decision-making.
The results provide practical guidance for firms to build an effective management team and control body for a company that could promote innovation. More specifically, a careful review of the CEO and BOD's human capital traits based on their experience could help identify suitable personnel. The selection of leaders based on their human capital traits should be explicitly tailored to different sub-industries and firms of different sizes. Moreover, it is important to consider the complementarity of human capital characteristics between the CEO and the BOD to establish a structure for innovation.