R&D investment management and ambidextrous technological innovation: Evidence from Chinese listed firms

Abstract

Firm-level technological innovation is in part driven by R&D management motivation. This paper studies the effect of Chinese listed firms’ R&D investment management on their ambidextrous technological innovation performance. In the prospective of internal financial constraints and earnings management, three R&D motivations are identified: strategically proactive intervention, resource-constrained passive adjustment, and R&D manipulation for earnings purposes. Based on the Chinese listed firm level data during 2007–2019, this paper analyzes the effects of these three different R&D management motivations on the ambidextrous innovation patent portfolio, cutting-edge innovation possibility and patent diversification. The empirical results reveal that R&D management significantly promotes ambidextrous innovation, particularly exploration innovation. Firms with more internal financial resources are more likely to engage in proactive R&D activities than those with less financial resources who are more likely to place earnings before R&D investment as the top priority. A robustness test that controls for the 2008 financial crisis also verifies our results.