Abstract
The Pooled OLS model is used to analyze whether governance structure such as family ownership, management, and control can actually influence R & D investment in Chinese family firms by application of the listed companies from the CSMAR database. After controlling for size, debt, age, profitability and growth, the positive impacts of family ownership and family management on R & D and the negative impact of family control on R & D are found. The other research question explored is whether the moderating effects of institution environment exist in the sample. Institution environment variable and its intersection terms with governance structure are added to the models respectively. Meanwhile, the positive impacts of family ownership and family management on R & D are weaker while the negative impact of family control is weaker provincially in a better institution environment. Regarding the institution environment itself, it shows a consistent positive impact on R & D investment. Meanwhile a substitution effect between the institution environment and the family governance structure is found.
Highlights
R & D investment is considered as the fundamental decision in firms’ innovation around the world [1]
The positive impacts of family ownership and family management on R & D are weaker while the negative impact of family control is weaker provincially in a better institution environment
Based on 4773 Chinese listed firm data from 2004 to 2012, the estimation results show that family ownership and family management have a positive impact on R & D investment; on contrary, family control has a negative impact on R & D investment
Summary
R & D investment is considered as the fundamental decision in firms’ innovation around the world [1]. Institution environment deserves more attentions for investigating the impacts of family ownership, management and control on R & D investment of family firms. This paper contributes to the literature by investigating the impacts of governance structure on R & D investment in Chinese family firms. Based on 4773 Chinese listed firm data from 2004 to 2012, the estimation results show that family ownership and family management have a positive impact on R & D investment; on contrary, family control has a negative impact on R & D investment.
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