Inherited culture and corporate innovation

We use a cultural measure derived from folklore to study its economic outcomes. Specifically, we investigate the impact of CEO’s risk-taking propensity, derived from ancestral folklore, on corporate innovation. Our findings show that firms led by CEOs with higher levels of folklore-based risk-taking achieve better innovation performance and more breakthrough innovations. This effect is stronger when the company faces intense creative destruction pressures and heightened product market competition. We also find that CEOs enhance innovation by improving efficiency rather than increasing R&D investment. Our findings underscore the practical value of folklore as a cultural measure in understanding economic outcomes.