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Innovation activities create substantial firm value, but they are difficult to manage owing to agency risk, which is commonly thought to result in shirking, and hence underinvestment in innovation. However, agency risk can also create inefficient allocation of resources among innovation activities, on which the literature has provided limited understanding. We examine an important outcome created by agency risk—that agents pursue quantity of innovation at the expense of novelty—and investigate how it is influenced by corporate and public governance. We theorize that improved corporate governance tools, including better alignment of agents' private incentives and stronger monitoring, and high-quality public governance reduce such agency risk in state-owned enterprises (SOEs). Furthermore, higher-quality public governance enhances the functioning of corporate governance tools in further reducing such agency risk in innovation. We test our theory by examining SOEs in China that responded to the state's pro-innovation policies relying disproportionately on quantifiable outcomes (e.g., patent counts) for assessing innovation performance. Our difference-in-differences estimates provide overall support for our hypotheses. These findings provide new insights on how agency risk affects innovation by distinguishing the consequences for quantity and novelty of innovation and for how conventional corporate governance tools shaping innovation depend on public governance. [ABSTRACT FROM AUTHOR]

There is growing interest in management and organizational research to study the relocation of knowledge workers, defined as a move by the knowledge worker to a different place of work. Relocation has been well studied as a potential source of losses or gains in human and social capital. However, our understanding of whether and how it disrupts a scientist's innovation activities is limited. Relocation could disrupt innovation activities in the new workplace by making it difficult for a scientist to coordinate work with prior collaborators with whom the scientist has relational experience and forcing the scientist to work with new collaborators. In this study, we develop a conceptual framework assessing the effectiveness of the scientists' research and development (R&D) experience to counter these disruptions arising from relocation and develop valuable patented innovations. We hypothesize that both the scientist's relational experience and working with new collaborators decrease the value of innovations the scientist creates after relocation. Scientist R&D experience, however, is double-edged in nature: It leads to less valuable innovations prior to relocation but facilitates the creation of more valuable innovations after it. Our theory suggests that this is because R&D experience facilitates the scientist's adaptation to the new context and helps coordinate her or his activities in new collaborations. Nevertheless, R&D experience is less effective in sustaining the efficacy of relational experience with prior collaborators after relocation. Using a longitudinal dataset from the knowledge-intensive genomics industry, we find support for our hypotheses. This study yields important managerial and policy implications. [ABSTRACT FROM AUTHOR]