CEO background experience and firms' environmental innovation: The moderating effect of tenure

Abstract

Environmental innovation is a key approach for firms wishing to improve their competitiveness, and CEOs have a crucial impact on the environmental innovation of the firms they lead. Based on upper‐echelon theory, this study explores the impact of CEOs' overseas experience, political background, and environmental background on their firms' environmental innovation, as well as the moderating effect of CEO tenure. We selected Chinese A‐share listed manufacturing companies operating between 2014 and 2021 as the research sample and tested our hypotheses using STATA 15.1 software. The results indicate that the political background, overseas experience, and environmental background of a CEO all have a positive impact on firms' environmental innovation. The CEO tenure plays a positive moderating role in the impact of the three types of CEO background experiences on firms' environmental innovation. Further analysis reveals that the promotion effect on firms' environmental innovation of CEO overseas experience and political background is more significant in state‐owned firms, while the promotion effect of environmental background is more significant in nonstate‐owned firms. When compared with small firms, the three background experiences have a more significant impact on environmental innovation in large firms. CEO background experience has a positive impact on both the substantive and strategic environmental innovation of firms. We provide references for the implementation of environmental innovation and the selection of relevant executives.