Managerial Incentives and IT Innovation: The Moderating Role of CEO's IT-Education and Career Experience

Despite the importance of IT innovation in the digitalized world, little research attention has been paid to examining the antecedents of firms' IT innovation, especially from a top management perspective. This study examines how managerial incentives, particularly risk-based ones, given to top managers motivate them to nurture IT innovation. We also consider how IT-related educational backgrounds and diversity of the career experiences of chief executive officers (CEOs) moderate the relationship between risk-based incentives and IT innovation. Our empirical analysis shows that risk-based incentives encourage top managers to support more IT innovation and to pursue more exploration in IT innovation by attenuating their risk-averse stance. In addition, our findings show that the impact of risk-based incentives on IT innovation and explorative IT innovation is stronger when the CEO has a stronger IT-related educational background and less diverse career experiences. Our results provide important theoretical and practical implications regarding the role of risk-based incentives and a CEO's background in fostering IT innovation.