CEO happiness curve and firm innovation: evidence from China

ABSTRACT

We investigate the impact of CEO’s happiness on firm innovation in China. As happiness is difficult to measure, we use CEO’s age based on the Happiness Curve theory. We find that when CEOs are in their less happy midlife stage, they more actively promote higher reward and risk innovation strategies, and that employee wellbeing represents a channel through which CEO unhappiness promotes innovation. The non-linear relationship between CEO age and risk-taking behaviour helps settle prior conflicting evidence which assumes a linear relationship.

KEYWORDS:

• Happiness curve
• CEO age
• innovation
• China

JEL CLASSIFICATION:

• G30
• O31
• I31

Highlights

• CEOs in their less happy midlife stage promote risk innovation strategies.

• The relationship between CEO age and risk-taking behaviour is non-linear.

• CEO unhappiness improves innovation activities through high employee wellbeing.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ The happiness curve detailed in Blanchflower (2020, 2021) comes from general survey data, such as Gallup, General Social Survey, Behaviour Risk Factor Surveillance System (BRFSS).

² We need to multiply 100, as we divide 100 for Age².