Abstract From the perspective of shareholders activism and behavior-based governance, this paper explores how large stockholders involvement affects enterprises’ radical innovation. The moderating effect of trust between large shareholder and manager is examined on the relationship between large stockholders involvement and radical innovation. The empirical results from a sample of 150 Chinese manufacturing enterprises reveal that: (1) large stockholders involvement has a significant positive effect on enterprises’ radical innovation; (2) large stockholders involvement promote strategic consensus between large shareholder and manager and then indirectly positive affect radical innovation; (3) trust between large shareholder and manager has a positive moderating effect on the above relationships. Theoretical contribution and managerial implication are discussed finally.
2013, Vol. 10 
