On the basis of the behavioral theory of the firm (BTOF), this study aims to introduce the moderating role of firm internationalization to explore whether and when financial performance shortfalls and innovation performance shortfalls influence firms’ decisions to hire returnee executives.
Using a comprehensive database of Chinese nonstate-owned listed manufacturing companies from 2011 to 2019, we conduct empirical tests to determine the credibility of our proposed theoretical hypothesis.
Firms eager to bolster their immediate financial standing and thus address financial performance shortfalls are typically less inclined to onboard returnee executives. In contrast, firms that focus on swiftly increasing their innovation capabilities in response to innovation performance shortfalls showcase a preference for returnee leadership. An ancillary observation is that a firm’s global footprint amplifies the positive influence of innovation performance shortfalls on its propensity to hire returnee executives.
By theorizing for the first time and providing empirical evidence that financial performance shortfalls and innovation performance shortfalls have different impacts on returnee executives, this study provides new insights into the BTOF and returnee executive literature.
