Abstract
R&D investment is the material basis and resource guarantee of enterprise innovation activities, which is beneficial to enterprises to build competitive advantages and obtain sustainable growth abilities. As the core of the corporate governance mechanism, the board of directors plays a dual function of service and supervision in the decision-making of R&D investment. The friendly CEO-board relationship facilitates the exchange of information between the CEO and the board members, which will undoubtedly have an important impact on the board’s role and R&D investment. Based on the above background, this paper conducts theoretical and empirical studies with the dynamic perspective of dual board functions （advisory and supervisory functions） based on the corporate life cycle. It analyzes the relationship among CEO-board connections, board functions and R&D investment. This study is conducted in three phases: Firstly, it explores the relationship between CEO-board relationship and R&D investment, and the mediating role of board functions. Secondly, it introduces the board advisory function and supervision function, and probes into the intermediary function of the board function between CEO-board connections and R&D investment. Thirdly, the impact mechanism in different life cycles may be different. Therefore, this paper introduces the enterprise life cycle into the relationship between board functions and R&D investment to examine its role in this relationship. Taking domestic high-tech listed firms as the research sample, this paper analyzes how and when CEO-director connections affect R&D investment. The results show that CEO-board connections can improve R&D investment, in which the service function of the board plays partial mediating function. For mature firms, the board advisory function has less positive impacts on R&D investment. At the same time, empirical results show that friendly CEO-director connections do not weaken the supervision of the board of directors, nor do they diminish R&D investment. This helps to reconcile the paradoxical conflict between the advisory function and the supervisory function in the process of board operation, and provide a reference for enterprises to carry out effective innovation activities.
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