Can stakeholders’ attention to innovation promote corporate innovation?

Given the significance of innovation in enabling firms to maintain a long-term competitive edge and secure excess profits, this paper aims to investigate whether and how stakeholders’ attention to innovation (SATI) influences corporate innovation.

This paper introduces a novel variable, SATI, which is achieved by segmenting stakeholders’ attention into two categories: attention to innovation and attention to other facets, using textual analysis methods. Subsequently, this paper empirically examines the influence of SATI on corporate innovation.

This paper finds that SATI positively affects corporate innovation input, and the result remains true after addressing possible endogeneity issues using instrumental variable regression. Furthermore, the positive effect of SATI on corporate innovation is stronger in firms facing greater financing constraints, thus verifying the financing constraints hypothesis. The positive effect is also stronger in firms with lower risk-taking levels, thus confirming the innovation failure tolerance hypothesis. Further analysis suggests that SATI increases both corporate innovation output and efficiency, thus ruling out the catering hypothesis.

This paper highlights the importance of SATI in driving corporate innovation. It enriches the literature on the repercussions of stakeholders’ attention and determinants of corporate innovation. In addition, it provides practical suggestions for further implementing China’s national innovation-driven development strategy.