Corporate Innovation and Corporate Value based on Management Strategy

A Corporate management strategy can be defined as embodying the propensity of top management that can affect the overall management activities. In particular, research was conducted in that management strategies can have an important influence on the study of the value relevance of corporate innovation. In this study, the management strategy analyzed the impact of corporate innovation on corporate value using Miles and Snow (1978, 2003)’s defense (prospector) strategy and ESG management strategy. The analysis results can be divided into two main categories：the analysis of the relationship between management strategy and corporate innovation, and the relationship between corporate innovation and corporate value according to management strategy. First, the results of the analysis of the relationship between management strategy and corporate innovation were first analyzed that defensive strategies had a significant (＋) effect on corporate innovation. As a result of the defense strategy, which is a stable manager’s strategy using cost reduction and economies of scale, has a positive effect on corporate innovation rather than prospective strategies, different results from expectations were confirmed. The prospective strategy was expected to be significant with corporate innovation indicators due to uncertainties such as new product development, new market development, and R&D, but there was no significance. Second, only ESG (integration) and social responsibility (S) were significantly positively (＋) related to corporate innovation, and the remaining governance and environmental responsibilities were not significant. From these results, it was partially confirmed that the more ESG management companies, the stronger the corporate innovation tendency. Next, the analysis of the value relevance of corporate innovation according to management strategy showed that the more defensive strategic companies and the more defensive innovative companies have a significant positive (＋) relationship with corporate value than those that do not (prospective innovative companies. These results can be estimated that participants in the capital market evaluate corporate innovation of defensive strategy companies that seek cost reduction and stable profitability more important than prospective strategies with high uncertainty in determining corporate value. Second, as a result of analyzing the value relevance of corporate innovation using ESG integrated indicators and individual indicators, it was analyzed that the value relevance of corporate innovation was significant (＋) for ESG management strategy companies. Research on the relationship between corporate innovation and corporate value has long been conducted. This study is meaningful in that it confirmed the importance of CEO's choice of management strategy, believing that corporate innovation and corporate value(Tobin Q) relationship will have different information effects and value relationships depending on the choice of management strategies.