Abstract
Behavioural theory examines how the intensity of underperformance influences firms' strategic decisions such as research and development (R&D) investment, but inconsistent inclusions arise. Moreover, insufficient attention is paid to the effect of institutional environments. Drawing on behavioural theory and institutional theory, we argue that the level of government environmental regulation and subsidy has a positive effect on the relationship between performance feedback and R&D expenditure through intensifying perceived knowledge deficiency and alleviating resource constraints. We test these arguments with 711 firm-year observations of Chinese listed companies in 16 environmentally disruptive sectors during the period of 2008 to 2015, finding empirical support. Our study contributes to behavioural theory and R&D literature by showing that uncertain attribution of performance shortfalls and severe resource constraints can result in firms' passive R&D decisions in response to underperformance, but government regulation and subsidy can help contain this problem.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
