An examination of the institutional implication of the relationship between the managerial level of education and experience on firm innovation in Africa

Abstract

Purpose Access to finance and corruption are two major institutional obstacles hindering firm innovation in Africa whose implication on the fit between managerial characteristics and firm innovation has not been examined. The purpose of this paper is to examine whether firms may want to hire managers with a good fit when faced with institutional constraints and the authors suggest managerial level of education and experience within an industry could play a vital role in helping such firms innovate. Design/methodology/approach Secondary data was obtained from the World Bank Enterprise Survey on 17 African countries and a series of hierarchical regression analyses were conducted to achieve the aim of the research. Findings The findings show that while managers with primary and secondary education had a negative relationship with firm innovation (product and process), managers with a university degree had a positive relationship. This relationship was also confirmed when the authors’ split the full sample into two sub-samples (the firms that are institutionally constrained by access to finance and corruption) and therefore confirm the institutional implications of managers fit for firm’s innovation. Originality/value While research on the effect of management characteristics on firm innovation has focused more on large firms and mostly from developed economies testing both direct and mediation effects, little research exists as to whether the institutional obstacles faced by small firms could influence the type of managers required to drive their innovation.

The relationship between perceived institutional conditions and firm-level innovations in emerging markets: Moderating effects of firm ownerships

“…Managerial experience : The innovation literature has well determined the nexus between years of top managers’ experience and its probable influence on firm-level innovations [ 60 ]. We expect that managerial experience could play key roles in overcoming the risks and negative effects of unfavourable institutional conditions [ 62 ]. Based on this, this research measured managerial experience using the question, "How many years of experience working in this sector does the top manager have?"…”

“…Managers with enough experience are anticipated to have familiarised themselves with previous unfavourable institutional conditions such as policy instabilities unfavourable informal competitive pressures, among others, and devise ways to overcome their negative influences on innovation. Empirical studies have proven that experienced managers understand the dangers posed by the informal competitive environment better, and this has a positive influence on their innovative performances [ 62 ]. When compared with new managers without more years of experience, they may also learn from the perceived institutional conditions embedded in the market environment, so they are likely to innovate amidst such negative conditions.…”