R&D investment under the influence of board characteristics and performance feedback



Year of publication 2017
Type Article in Proceedings
Conference Proceedings of the 5th International Conference on Management, Leadership and Governance (ICMLG 2017)
MU Faculty or unit

Faculty of Economics and Administration

Field Management and administrative
Keywords behavioral theory of the firm; performance feedback; R&D; board characteristics
Description Performance feedback process assumed by the behavioral theory of the firm has been studied in numerous studies and its influence on firms’ R&D expenditures has been confirmed. It supposes that a firm pays attention to certain aspiration levels – comprising a firm historical performance and performance of its peers. When this level is not attained, a firm is motivated towards change, which is often translated as an increase in R&D spending. However, performance feedback is clearly not the only one of the possible factors affecting firms’ short term behavior. In this paper, it is argued that board characteristics – notably board size, age of its members and board turnover – and their changes can influence yearly differences in R&D spending as well. This paper studies joint influence of performance feedback process and board characteristics on a sample of large German industrial firms listed on exchange markets.
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