Innovation for social value : three essays on pay equity, healthcare delivery, and drug development

Abstract

In recent years, research on social value creation has gained increasing attention, with a growing body of literature investigating how organizations can contribute to addressing social needs and challenges. Scholars have drawn upon various theoretical perspectives, such as social learning theory, stakeholder theory, and institutional theory, to explain the antecedents and processes of social value creation. To add to this stream of literature, I conduct three studies to investigate the role of innovation in enabling organizations to generate social value and to examine how the institutional environment influences innovation that contributes to social value creation. The first essay examines the influence of AI orientation on human value within organizations. Given the emergence of AI, concerns arise about its potential to diminish the value and contributions of human labor, which can lead to severe ethical problems, such as the deterioration of employee well-being, increased job stress, and a sense of deprivation. This study examines how AI orientation affects human value within organizations by investigating its impact on a firm’s labor income share and top management team (TMT)-employee pay gap. By analyzing a sample of Chinese-listed firms from 2015 to 2022, we find that a firm’s AI orientation is positively related to its labor income share and negatively related to the TMT-employee pay gap. We also show that these effects are stronger for knowledge-intensive firms, and the negative effect of AI orientation on the pay gap is weaker when firms’ TMT tenure is long. These findings contribute to the business ethics and AI literatures by revealing the beneficial and contingent roles of AI in preserving human value. The second essay investigates the role of intelligent support systems (ISS) in moderating fatigue’s impact on healthcare delivery. Focusing on stroke care, we analyze the field trial of StrokePro, an AI-driven ISS designed to improve care delivery. Using a difference-in-differences approach with coarsened exact matching on a stroke care clinical records dataset, we assess the role of ISS in moderating fatigue’s impact on caregiver guideline adherence. We found that ISS helps alleviate the negative effects of fatigue on caregiver guideline adherence, particularly for patients with high disease severity and complex diagnoses, and for less proficient caregivers. The third essay investigates how process regulation influences product innovation. While existing research has widely examined how regulations affect innovation inputs and outputs, we know little about the role of regulation that targets the innovation process. We argue that process regulation may decrease firms’ product innovation because it slows the development process and heightens pipeline abandonment chances. Leveraging a clinical trial inspection enforced by the China Food and Drug Administration as an exogenous shock, we assess the impact of process regulation on product innovation in the pharmaceutical industry. Employing a difference-in-differences approach, we find that clinical trial inspection reduces firms’ product innovation. We further show that the negative effect of clinical trial inspection on product innovation is weaker for firms with high R&D intensity or foreign shareholding. These findings extend our understanding of regulation’s influence on innovation and provide important implications for pharmaceutical firms and policymakers.