Dual Pathways of Value Creation of CEO Affectivity and Digital Innovation

While a wealth of existing studies highlights the importance of digital innovation, they primarily focus on the economic value of digital innovation. Accordingly, practical guidance regarding how to promote digital innovation remains unclear. To fill this important void, this study conceptualizes CEO affectivity, drawing upon upper echelons theory, and tests how CEO affectivity is associated with the digital innovation of firms and their value. Our study suggests dual pathways of CEO affectivity regarding digital innovation: (1) CEO affectivity enhances digital innovation, and (2) CEO affectivity strengthens the value of digital innovation. Specifically, we demonstrate that CEO positive affectivity promotes the digital innovation of firms compared to CEO negative affectivity. On the other hand, CEO negative affectivity plays a key role in generating business value from digital innovation, compared to CEO positive affectivity. Our findings provide novel insights into digital innovation and exemplify the critical role of CEO affectivity in decision-making.