Bridging the Divide: How Dual-Background Leaders Unlock Returnee Innovation in Politically Connected Chinese Firms

Abstract

This study examines how firm leadership diversity influences innovation, focusing on the interplay between returnee leaders – those with international experience – and politically connected leaders. While returnee leaders introduce globally derived innovation practices, their efforts often clash with the state-aligned agendas of politically connected leaders. By integrating bridging mechanisms into upper echelons theory, we introduce dual-background leaders – executives with both political and international experience – to bridge these divergent cognitive logics. Through a longitudinal analysis of Chinese publicly listed firms from 2006 to 2016, we find that the positive effect of returnee leaders on innovation performance is significantly weakened in firms with high political connectivity, especially in the absence of dual-background leaders. Conversely, firms that effectively integrate dual-background leaders are better positioned to reconcile competing innovation agendas and unlock the synergistic potential of leadership diversity.