The drivers of international corporate entrepreneurship: CEO incentive and CEO monitoring mechanisms

Abstract

This study examines international corporate entrepreneurship associated with new product lines and new geographic markets. Drawing upon agency theory and the corporate entrepreneurship literature, we posit that aligning CEO incentives with shareholder interests and adopting CEO monitoring mechanisms will promote international corporate entrepreneurship. We test the hypotheses using 277 U.S.-based manufacturing firms during the period from 2003 to 2009. Our findings highlight how various governance mechanisms such as a CEO's compensation linked to the long-term performance of the firm, the values of the CEO's shareholding, independent board leadership, and the representation of outside directors influence international corporate entrepreneurship of existing firms. (C) 2015 Elsevier Inc. All rights reserved.