UNIVERSITY OF COLOGNE

Although it is known that innovation is a common job responsibility of CMOs, it is unclear whether CMOs actually contribute to firms’ innovation efforts. In this paper, we propose that CMOs can have a positive influence on the outcome of firms’ innovation efforts by obtaining more market knowledge and enhancing marketing as well as R&D capabilities. And we investigate the role corporate governance (i.e., board and CEO characteristics) plays on CMOs’ impact on the value of firms’ innovation efforts to provide relevant implications. Using secondary data from 1999 to 2016, we find supporting evidence that on average firms with CMOs create more valuable innovations. We show that insider CEOs and marketing-experienced board members strengthen the positive effect of CMOs on the value of firms’ innovation efforts, while CEO overconfidence and board tenure weaken CMOs’ ability to drive valuable innovations. To provide more practical implications, we also show that increasing valuable innovations is one mechanism to explain the relationship between CMOs and firm performance, extending the current understanding of CMOs’ contribution to firm performance.