CEO Overconfidence and open innovation in Chinese biopharmaceutical industry: does top management team social capital matter?

Open innovation beyond organisational boundaries has become a key factor in improving enterprise performance and maintaining sustained competitive advantage. However, most research on the antecedents of open innovation has focused on external environment or organisational-level factors, and the exploration of the micro-level has not yet been sufficiently understood. Following the Upper Echelon Theory and Social Capital Theory, this study explores when CEO overconfidence influences the adoption of different open innovation modes. We developed a model by considering top management team (TMT) social capital as a moderating role from the CEO-TMT interaction perspective. Using a longitudinal data set of listed enterprises in the Chinese biopharmaceutical industry from 2013 to 2017, we find that CEO overconfidence promotes the adoption of the two open innovation modes (inbound and outbound). TMT social capital negatively moderates the effect of CEO overconfidence on outbound open innovation. However, the moderating effect is not significant between CEO overconfidence and inbound open innovation. Meanwhile, we conduct further analysis based on enterprise ownership. The findings provide new insights into the micro-foundation of open innovation.