Executives External Pay Gap and Enterprises Open Innovation
Research Article
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Executives External Pay Gap and Enterprises Open Innovation

Yuan Gao 1* Jieyue Cao 2
1 Beijing Institute of Technology
2 East China Normal University
*Corresponding author: gaoyuan0251@163.com
Published on 9 September 2025
Journal Cover
AEMPS Vol.215
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-80590-357-4
ISBN (Online): 978-1-80590-358-1
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Abstract

This study uses a panel regression model to empirically examine the influence of the executive pay gap on open innovation and its moderating effect. It picks the annual data of listed high-tech businesses in China from 2010 to 2022. The study demonstrates that a rise in the external executive pay gap will result in a rise in the degree of open innovation within businesses. The size of the board acts as a moderator. This research will offer crucial theoretical direction and decision-making resources for enhancing the corporate incentive structure for remuneration and developing innovative ideas of the highest caliber.

Keywords:

Executives Pay Gap, Executives External Pay Gap, Innovation, Open Innovation.

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Gao,Y.;Cao,J. (2025). Executives External Pay Gap and Enterprises Open Innovation. Advances in Economics, Management and Political Sciences,215,54-63.

References

[1]. Festinger, L. (1954). A Theory of Social Comparison Processes. Human Relations, 7(2).

[2]. Eric A., Vilmos F., JR. Henry L., (2010).The effect of CEO pay deviations on CEO withdrawal, firm size, and firm profits.Strategic Management Journal, Vol.31(6): 629-651

[3]. Pan Z., He S., Li J.(2019). Female executives, pay gap and corporate strategy differences [J]. Economic Management, vol. 41 (2): 122-138.(In Chinese)

[4]. Lu, J., & Wang, J. (2021). Corporate Governance, Law, Culture, Environmental Performance and CSR Disclosure: A Global Perspective. Journal of International Financial Markets, Institutions & Money, 70, 101264.

[5]. Zhang, Z. H., & Zhu, X. L. (2018). Nature of Property Rights, Executive External Pay Gap, and Corporate Risk-Taking. Journal of Zhongnan University of Economics and Law, (3), 14-22, 158. (In Chinese)

[6]. Huang, G. Y., Huang, H. H., & Lee, C. I. (2019). Is CEO Pay Disparity Relevant to Seasoned Bondholders? International Review of Economics and Finance, 64, 271-289.

[7]. Chesbrough, H. (2006). Open Innovation: The New Imperative for Creating and Profiting from Technology. Harvard Business School Press Books.

[8]. Nambisan, S., Lyytinen, K., Majchrzak, A., & Song, M. (2017). Digital Innovation Management: Reinventing Innovation Management Research in A Digital World. MIS Quarterly, 41(1), 223-238.

[9]. Giagnocavo, C., de Cara-García, M., González, M., Juan, M., Marín-Guirao, J. I., Mehrabi, S., Rodríguez, E., van der Blom, J., & Crisol-Martínez, E. (2022). Reconnecting Farmers with Nature through Agroecological Transitions: Interacting Niches and Experimentation and the Role of Agricultural Knowledge and Innovation Systems. Agriculture (Switzerland), 12(2).

[10]. Jennifer L.Innovation: Are we really creating something new? [J].Children Australia, 2019, Vol.44(1): 1-4

[11]. Kini, O., & Williams, R. (2011). Tournament Incentives, Firm Risk, and Corporate Policies. Journal of Financial Economics, 103(2).

[12]. Cowherd, P. (2001). What Is the Business Case For Investing in Inner-City Neighborhoods? Public Management, 83(1), 12-12.

[13]. Jia, N., Tian, X., & Zhang, W. (2016). The Real Effects of Tournament Incentives: The Case of Firm Innovation. Social Science Electronic Publishing.

[14]. Zhu, C., & Hua, G. H. (2021). Research on The Relationship Between Industry Tournament and Enterprise Green Innovation. Modern Economic Research, (11), 74-85. (In Chinese)

[15]. Fredrickson, J. W., Davis-Blake, A., & Sanders, W. M. G. (2010). Sharing The Wealth: Social Comparisons and Pay Dispersion in The CEO's Top Team. Strategic Management Journal, 31(10), 1031

[16]. Pisano, G. (1990). The R&D boundaries of the firm: an empirical analysis. Administrative Science Quarterly, 35, 153-176.

[17]. Thong, R. (2018). Transparency and Firm Innovation. Journal of Accounting and Economics, 66(1), 67-93.

[18]. Chuluun, T., Prevost, A., & Upadhyay, A. (2017). Firm network structure and innovation. Journal of Corporate Finance, 44(7), 193-214.

[19]. Ji, Y., Howard, M., Pahnke, E. C., et al. (2016). Understanding network formation in strategy research: Exponential random graph models. Strategic Management Journal, 37(1), 22-44.

[20]. Peng, H., & Mao, X.(2017). Government innovation subsidies, corporate executives' backgrounds, and R&D investment: Empirical evidence from China's high-tech industry. Finance & Trade Economics, 38(3), 147-161. (In Chinese)

[21]. Brockman, P., Khurana, I. K., & Zhong, R. I. (2018). Societal trust and open innovation. Research Policy, 47(10), 2048-2065.

[22]. Gu, H. & Zhu, H., (2021). Does Executive Pay Gap Promote Enterprises Innovation Investment? -Based on Evidence from Chinese A-Share Listed Companies. Accounting Research, (12), pp.107-120.

[23]. Niu, J., Li, S., Yang, Y., & Dong, C. (2019). Executives pay gaps, governance models, and corporate innovation. Management Science, 2, 77-93. (In Chinese)

[24]. Li, W., Cen, Y., & Hu, Y. (2014). Do external pay gaps incentivize executives? An empirical study based on the Chinese listed company managers' market and the nature of property rights. Nankai Business Review, 4, 24-35.

[25]. Kennedy, P. (1998). A Guide to Econometrics (4th ed.). Blackwell Publishers.

[26]. Sheng, M. Q., Zhang, Y. N., & Jiang, S. Z. (2019). Executive Pay Gap and Firm's Total Factor Productivity. Journal of Hebei University of Economics and Business, 2, 81-89. (In Chinese)

References

[1]. Festinger, L. (1954). A Theory of Social Comparison Processes. Human Relations, 7(2).

[2]. Eric A., Vilmos F., JR. Henry L., (2010).The effect of CEO pay deviations on CEO withdrawal, firm size, and firm profits.Strategic Management Journal, Vol.31(6): 629-651

[3]. Pan Z., He S., Li J.(2019). Female executives, pay gap and corporate strategy differences [J]. Economic Management, vol. 41 (2): 122-138.(In Chinese)

[4]. Lu, J., & Wang, J. (2021). Corporate Governance, Law, Culture, Environmental Performance and CSR Disclosure: A Global Perspective. Journal of International Financial Markets, Institutions & Money, 70, 101264.

[5]. Zhang, Z. H., & Zhu, X. L. (2018). Nature of Property Rights, Executive External Pay Gap, and Corporate Risk-Taking. Journal of Zhongnan University of Economics and Law, (3), 14-22, 158. (In Chinese)

[6]. Huang, G. Y., Huang, H. H., & Lee, C. I. (2019). Is CEO Pay Disparity Relevant to Seasoned Bondholders? International Review of Economics and Finance, 64, 271-289.

[7]. Chesbrough, H. (2006). Open Innovation: The New Imperative for Creating and Profiting from Technology. Harvard Business School Press Books.

[8]. Nambisan, S., Lyytinen, K., Majchrzak, A., & Song, M. (2017). Digital Innovation Management: Reinventing Innovation Management Research in A Digital World. MIS Quarterly, 41(1), 223-238.

[9]. Giagnocavo, C., de Cara-García, M., González, M., Juan, M., Marín-Guirao, J. I., Mehrabi, S., Rodríguez, E., van der Blom, J., & Crisol-Martínez, E. (2022). Reconnecting Farmers with Nature through Agroecological Transitions: Interacting Niches and Experimentation and the Role of Agricultural Knowledge and Innovation Systems. Agriculture (Switzerland), 12(2).

[10]. Jennifer L.Innovation: Are we really creating something new? [J].Children Australia, 2019, Vol.44(1): 1-4

[11]. Kini, O., & Williams, R. (2011). Tournament Incentives, Firm Risk, and Corporate Policies. Journal of Financial Economics, 103(2).

[12]. Cowherd, P. (2001). What Is the Business Case For Investing in Inner-City Neighborhoods? Public Management, 83(1), 12-12.

[13]. Jia, N., Tian, X., & Zhang, W. (2016). The Real Effects of Tournament Incentives: The Case of Firm Innovation. Social Science Electronic Publishing.

[14]. Zhu, C., & Hua, G. H. (2021). Research on The Relationship Between Industry Tournament and Enterprise Green Innovation. Modern Economic Research, (11), 74-85. (In Chinese)

[15]. Fredrickson, J. W., Davis-Blake, A., & Sanders, W. M. G. (2010). Sharing The Wealth: Social Comparisons and Pay Dispersion in The CEO's Top Team. Strategic Management Journal, 31(10), 1031

[16]. Pisano, G. (1990). The R&D boundaries of the firm: an empirical analysis. Administrative Science Quarterly, 35, 153-176.

[17]. Thong, R. (2018). Transparency and Firm Innovation. Journal of Accounting and Economics, 66(1), 67-93.

[18]. Chuluun, T., Prevost, A., & Upadhyay, A. (2017). Firm network structure and innovation. Journal of Corporate Finance, 44(7), 193-214.

[19]. Ji, Y., Howard, M., Pahnke, E. C., et al. (2016). Understanding network formation in strategy research: Exponential random graph models. Strategic Management Journal, 37(1), 22-44.

[20]. Peng, H., & Mao, X.(2017). Government innovation subsidies, corporate executives' backgrounds, and R&D investment: Empirical evidence from China's high-tech industry. Finance & Trade Economics, 38(3), 147-161. (In Chinese)

[21]. Brockman, P., Khurana, I. K., & Zhong, R. I. (2018). Societal trust and open innovation. Research Policy, 47(10), 2048-2065.

[22]. Gu, H. & Zhu, H., (2021). Does Executive Pay Gap Promote Enterprises Innovation Investment? -Based on Evidence from Chinese A-Share Listed Companies. Accounting Research, (12), pp.107-120.

[23]. Niu, J., Li, S., Yang, Y., & Dong, C. (2019). Executives pay gaps, governance models, and corporate innovation. Management Science, 2, 77-93. (In Chinese)

[24]. Li, W., Cen, Y., & Hu, Y. (2014). Do external pay gaps incentivize executives? An empirical study based on the Chinese listed company managers' market and the nature of property rights. Nankai Business Review, 4, 24-35.

[25]. Kennedy, P. (1998). A Guide to Econometrics (4th ed.). Blackwell Publishers.

[26]. Sheng, M. Q., Zhang, Y. N., & Jiang, S. Z. (2019). Executive Pay Gap and Firm's Total Factor Productivity. Journal of Hebei University of Economics and Business, 2, 81-89. (In Chinese)

Cite this article

Gao,Y.;Cao,J. (2025). Executives External Pay Gap and Enterprises Open Innovation. Advances in Economics, Management and Political Sciences,215,54-63.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

About volume

Volume title: Proceedings of the 4th International Conference on Financial Technology and Business Analysis

ISBN: 978-1-80590-357-4(Print) / 978-1-80590-358-1(Online)
Editor: Lukáš Vartiak
Conference website: https://2025.icftba.org/
Conference date: 12 December 2025
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.215
ISSN: 2754-1169(Print) / 2754-1177(Online)

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