Executive pharmaceutical background, R&D investment and corporate innovation performance

In the context of China's innovation-driven economy, the competitive advantage for pharmaceutical companies increasingly depends on their level of innovation. The executives, as the highest decision-makers in the company, directly influence corporate research and development (R&D) investment and innovation performance. Additionally, government subsidies, as an external factor alleviating corporate financial constraints, also impact a company's R&D investment. According to a survey by the Journal of China Securities, at the end of 2020, among 119 pharmaceutical companies listed on the A-share market, only 53.3% had Chief Executive Officer (CEOs) with pharmaceutical backgrounds. This study constructs a theoretical model of executive pharmaceutical backgrounds, R&D investment, government subsidies, and corporate innovation performance in pharmaceutical companies, aiming to reveal the mechanism and boundary condition between executive pharmaceutical backgrounds and corporate innovation performance in the pharmaceutical industry.

This study uses Chinese pharmaceutical companies listed from 2015 to 2022 as the research sample. The selected sample was processed as follows: companies with significant issues and risks of Special Treatment (ST) or *ST were excluded, companies with missing data were excluded, and companies for which executive background data could not be obtained were excluded. After these exclusions, the study obtained data for 223 listed pharmaceutical companies over 8 years. Then we constructed a three-stage regression model to test the impact of executive pharmaceutical background on R&D investment, the impact of R&D investment on corporate innovation performance, and the mediating effect of R&D investment. Considering that some scholars raised questions about it, this study simultaneously uses the Bootstrap analysis method in the SPSS PROCESS to test the mediating effect of R&D and the moderated mediating effect of government subsidies.

The empirical research results reveal that executive pharmaceutical backgrounds have a significant positive impact on corporate R&D investment. R&D investment contributes to the innovation performance of pharmaceutical companies and plays an intermediary role between executive pharmaceutical backgrounds and corporate innovation performance. Government subsidies act as a moderator in the relationship between executive pharmaceutical backgrounds and R&D investment, and they also moderate the mediating effect of executive pharmaceutical backgrounds, R&D investment, and corporate innovation performance.

This study provides insight from a dual perspective of internal and external factors, revealing the internal mechanism and boundary conditions influencing the innovation performance of pharmaceutical companies. In conclusion, pharmaceutical companies should employ executives with pharmaceutical backgrounds to manage the company. This will help increase the company's R&D investment, subsequently improving R&D performance and enhancing the pharmaceutical company's innovation competitiveness. This study not only expands the theories in the fields of executive characteristics, R&D investment, and corporate innovation performance but also has important policy implications for the appointment and selection of executives in pharmaceutical companies.