In this study, we find evidence that CEOs’ hobby of going to strip clubs is systematically related to innovation success in the firms they manage. Firms led by clubbing CEOs generate significantly better innovation outcomes, measured by patents and associated citations, and pursue more diverse and original patents. Clubbing CEOs enhance innovation performance by improving R&D productivity rather than spending more on R&D. A trait potentially learned from the strippers. Additionally, clubbing CEOs are effective when their wives provide them greater autonomy. We rule out several alternative explanations, including the pilot CEOs hypothesis (Sunder, et. al 2015), leading us to conclude that CEOs' club activities capture the personality trait of infidelity. Infidelity combines risk taking with a desire to pursue novel experiences and has been associated with creativity. We do not find similar results for CEOs who attend churches, suggesting that morality alone does not explain our findings. Overall, our evidence suggests that infidelity provides intrinsic motivation for innovation, highlighting potential limitations of extrinsic motivation provided by traditional contract-based terms.
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