Abstract: In this paper, we explore the effects of star scientists and chief executive officer (CEO) inventors on firms’ innovation productivity and direction. Star scientists serve as an important source of innovation for firms, but their activities can draw firm resources away from others’ R&D efforts within the firm and can divert the firm’s R&D activities away from industry trends. We argue that R&D-oriented CEOs can leverage their experience to better manage star scientists and keep firm R&D efforts in line with industry trends. Using data from 428 U.S. biotechnology firms that existed between 1970 and 2000, we test the hypothesis that star scientists and CEO inventors interactively influence firm innovation performance and direction. We illustrate that while stars positively affect firm innovation productivity, their presence causes firm R&D outcomes to diverge from industry R&D outcomes. We discover that firm innovation productivity and alignment with industry trends are greatest when both star scientists and CEO inventors are jointly present on innovation team. In doing so, we offer insights into the way that human capital contributes to competitive advantage.
Keywords: star employee, human capital, innovative performance, knowledge search, innovation