Relationship Between Intellectual Capital, Executive Motivation, and Corporate Innovation Level —Evidence from Chinese Listed Manufacturing Companies

Abstract

In the knowledge economy era, innovation is the main engine that drives high-quality development of the manufacturing industry. Exploring the mechanism behind intellectual capital, its constituent elements that stimulate innovation within manufacturing enterprises, and the influence of executive motivation emerges as a crucial imperative, considering intellectual capital as the sum of intangible assets of enterprises. Unraveling this intricate interplay becomes essential in comprehending the driving forces behind innovation in this sector. Based on this, the present study analyzed the relationship between intellectual capital, executive incentives, and corporate innovation level using a sample of manufacturing companies listed in Shanghai and Shenzhen A-shares from 2012–2021. The empirical findings demonstrate the positive impact of human capital, structural capital, and relational capital on the innovation levels of manufacturing firms. Moreover, executive compensation incentives and equity incentives also contribute positively to enhancing firm innovation. Notably, these executive incentives play a vital moderating role in strengthening the relationship between intellectual capital dimensions and firm innovation. Intellectual capital dimensions have a stronger impact on innovation levels in non-state-owned manufacturing enterprises than in their state-owned counterparts. Moreover, the positive influence of intellectual capital on innovation is more significant in highly marketized regions compared to regions with lower levels of marketization.