The Influence of Strategic Leadership on Firm Inventive and Innovative Performance

Strategic leaders hold different beliefs regarding how much to invest in technological innovation, and how to manage it. While certain visionary leaders have created extraordinarily innovative organizations, little evidence exists regarding the degree to which strategic leaders generally influence the production of valuable inventions and new products. We examine how much of the variation in firms’ inventive (patent) and innovative (new product) performance strategic leaders explain. Based on a sample of Chief Executive Officers (CEOs) and Chief Scientific Officers (CSOs) who managed 27 large biopharmaceutical companies, from 1984 through 2004, we find that strategic leaders explain between 38% and 43% of the variation in inventive performance across firms, and that CEOs explain more of this variation than do CSOs. Stable firm characteristics are responsible for 27% of the variation in firms’ inventive performance. By contrast, 51% of the variation in innovative performance is attributable to firm differences, and CEOs and CSOs explain less than 4% of this. Finally, we show that CEOs and CSOs strongly influence the degree to which a firm derives inventive advantage from internal and external knowledge diversity