CEO Human Capital and Digital Product Innovation: A Dynamic Managerial Capabilities Perspective

Schulz , Colin; Bendig, David; Kriebel, Johannes; Haubner, Kathrin; Fainshmidt, Stav

Abstract

Manufacturing firms face increasing pressures to digitalize their resource base. Following the notion that adaptive changes hinge on the knowledge of top managers, we examine how the technology- and business-related human capital of chief executive officers (CEOs) drives digital product innovation in distinct environments. Drawing on the dynamic managerial capabilities perspective, we argue that technological knowledge enables CEOs to sense and act on opportunities arising from digital technologies, positively influencing digital product innovation, whereas business knowledge leads CEOs to pursue a more general set of growth opportunities, negatively influencing digital product innovation. We further propose that environmental dynamism moderates these effects, as CEOs’ human capital fosters strategic change in response to shifts in firms’ environments. Our econometric analysis, using a panel data set of 216 U.S. manufacturing firms and examining 8,216 new product announcements, broadly supports our hypotheses. Interestingly, the positive effect of CEO technological knowledge and the negative effect of CEO business knowledge on digital product innovation both weaken and are even reversed in more dynamic environments. Follow-up interviews further illustrate why some CEOs are more adept than others at leveraging digital technologies to reconfigure their firms’ resource base. This research contributes to the information systems literature by extending and contextualizing the specialist human capital perspective in extant digital product innovation research, bridging the gap between scholars who advocate for technological expertise and those who promote business expertise in top management. We also highlight the pivotal role of CEOs as chief innovators in their firms, asserting that the value of CEOs’ human capital extends beyond the expertise of their top management team members. Finally, we deepen the understanding of the distinct approaches CEOs take to initiate, develop, and implement digital product innovation in established firms.