R&D investments in family and founder firms: An agency perspective

Investments in R&D can influence a firm's ability to develop new products and to create and adopt innovative technologies that may enhance productivity. However, due to uncertainty regarding the outcome, investments in R&D may lead to an agency problem between the owners and the managers of a firm. Family and founder firms are often considered to be different in their agency situation than other firms, which may have an influence on R&D investments. This paper analyzes R&D spending in family and founder firms versus other firms. The results show that while family ownership decreases the level of R&D intensity, ownership by lone founders has a positive effect not only on R&D intensity but also on the level of R&D productivity. The paper contributes to the understanding of the role of entrepreneurship in making high risk/high return R&D decisions.     

Technological intensities and economic performance: a study of foreign and local electronics firms in Malaysia

This article compares technological intensities (TI) and economic performance of foreign and local electronics firms in Malaysia. The results show that foreign firms enjoyed higher labour productivity, wages and export intensity than local firms, though technological intensities between both sets of firms were similar. The econometric results show a strong and positive relationship between labour productivity and technological intensity in all the samples. The higher coefficient of TI in the local sample compared to the foreign sample shows that productivity in local firms is driven much more from in-house technological effort at host-sites than in foreign firms who can access technology from their parent plants. However, the relationship between TI (contributed by differences in R&D intensity) and export-intensity in the local sample is negative demonstrating that much of such effort is devoted to inward-oriented production. Reversing the relationship also produced the same negative relationship in the local sample. Skills intensity enjoyed a positive relationship with TI with similar coefficients. The positive and significant relationship between wages, and R&D and TI shows that the more technology-intensive local firms pay higher wages to attract human capital.     

External and internal influences on R&D alliance formation: Evidence from German SMEs

Relying on relational capital theory and transaction cost economics (TCE), this study identifies factors that impede or promote alliance formation in small to medium-sized enterprises (SMEs). Environmental uncertainty and knowledge intensity impede firms' R&D alliance formation; the focal firm's overall trust in partners enhances alliance formation. Trust interacts positively with environmental uncertainty and knowledge intensity to affect alliance formation in SMEs. The findings reflect data from a longitudinal sample of 854 German SMEs, captured over eight years from 1999 to 2007.     

Technical Progress and Labour Demand in Swedish Manufacturing Firms

Controlling firms’ sales in the labour demand model, this paper investigates effects of trade and R&D via technical progress on labour demand in a dynamic framework, based on a panel of Swedish manufacturing firms for 1990s. The main results of this study indicate that employment elasticities with respect to different characteristics of firms (wages, total sales, exports and R&D efforts) and industrial import penetration could vary across respective skilled sectors. There is some indication to that import penetration from fourteen ‘old members’ of European Union could induce capital-saving technical progress and result in the rise in demand for labour for firms in medium-low skilled sector, whilst those from the ten ‘new members’ of European Union could induce x-efficiency and labour-saving technical progress for firms in low-skilled sector. Furthermore, the effects of R&D intensity on demand for labour are positive and significant for firms in medium-high-skilled and high-skilled sectors.

The Interdependence of R&D Activity and Debt Financing of Young Firms

We investigate the interdependence of debt financing and R&D activities of young firms. Applying a bivariate Tobit model, we find that there is a positive interdependent relationship between the share of loan financing and R&D intensity. A higher share of loan financing allows for more R&D in young firms and, at the same time, a higher R&D intensity allows for a higher loan share. This result is mainly driven by start‐ups exhibiting high values of R&D intensity or leverage. Another remarkable result of our study is that the positive relationship between R&D and loan financing can only be detected if we consider that, first, the decisions on R&D and on loan financing are made simultaneously and, second, the decision on R&D impacts the decision on loan financing and vice versa.     

The influence of age on SMEs’ growth determinants: empirical evidence

This paper seeks to investigate whether age is a fundamental characteristic of the relationships between determinants and growth. The empirical evidence obtained allows us to conclude that: (1) age and size are restrictive factors of the growth of young SMEs, but they are not important for the growth of old SMEs; (2) cash flow and debt are of greater relative importance for growth in young SMEs than for growth in old SMEs; (3) R&D intensity and labour productivity are of greater relative importance for growth in old SMEs than for growth in young SMEs; (4) interest on debt is of greater relative importance for diminished growth in young SMEs than for diminished growth in old SMEs; and (5) R&D intensity in situations of financial deficit is of greater relative importance for diminished growth in young SMEs than for diminished growth in old SMEs, but only in context of high-tech SMEs.     

Country Relational Distance,Organizational Power and R&D Managers: Understanding Environmental Challenges for Foreign R&D in China

This study examines the challenges of foreign research and development (R&D) in China, based on interviews with 32 senior R&D managers. It confirms the findings from previous research that many barriers still exist in China for foreign R&D, and such barriers include institutional environment, infrastructure and labour management. Among the three categories, issues related labour management, such as increasing labour cost and mobility, lack of experience and creativity and cultural differences among the research staff, prove to be most challenging for management, while China's institutions and infrastructure do not seem to pose big problems for foreign companies. This study also finds that responses from R&D managers are not consistent, and the differences could be largely explained by three types of factors: relational distance between the parent country and China, the strength and experience of foreign companies, and the manager's personal experience and closeness with China. Further research is needed to explore these issues due to the small sample size of this study.     

The Effect of R&;D Intensity on Corporate Social Responsibility

This study examines the impact that research and development (R&D) intensity has on corporate social responsibility (CSR). We base our research on the resource-based view (RBV) theory, which contributes to our analysis of R&D intensity and CSR because this perspective explicitly recognizes the importance of intangible resources. Both R&D and CSR activities can create assets that provide firms with competitive advantage. Furthermore, the employment of such activities can improve the welfare of the community and satisfy stakeholder expectations, which might vary according to their prevailing environment. As expressions of CSR and R&D vary throughout industries, we extend our research by analysing the impact that R&D intensity has on CSR across both manufacturing and non-manufacturing industries. Our results show that R&D intensity positively affects CSR and that this relationship is significant in manufacturing industries, while a non-significant result was obtained in non-manufacturing industries.     

Quantile estimates of the impact of R&D intensity on firm performance

This paper investigates the relationship between initial research and development (R&D) intensity and firm growth using a unique data set for firms with R&D activities in Austria during the period 1995–2006. Results based on the least absolute deviation (LAD) estimator show that initial R&D intensity has a positive and significant impact on both employment and sales growth in the subsequent 2 years. Quantile regressions for each cross-section reveal that the impact of R&D intensity is significant from 0.3 to the highest quantile of the conditional distribution of employment growth. Furthermore, the elasticity of employment growth with respect to R&D intensity is highest for firms at or slightly below the median of the distribution of firm growth. Finally, we find that the impact of R&D decreases significantly over time.     

R&D activity in Canada: does corporate ownership structure matter?

This study examines the link between ownership structures and R&D activities in Canada. We hypothesize that highly concentrated ownership structures or the presence of controlling minority shareholders negatively affects R&D intensity of Canadian manufacturing firms. Our results show that the concentration of voting rights is negatively related to the level of R&D expenditure and R&D outcomes. Furthermore, we show that the level of separation between the voting and cash flow rights held by dominant shareholders of “Controlling Minority Structure” firms has a positive effect on R&D intensity but a negative effect on R&D outcomes. Copyright © 2010 ASAC. Published by John Wiley & Sons, Ltd.     

R&D profitability: the role of risk and Knightian uncertainty

This paper provides the first empirical attempt of linking firms’ profits and investment in R&D revisiting Knight’s (Risk, uncertainty and profit, Hart, Schaffner & Marx, Boston, 1921) distinction between uncertainty and risk. Along with the risky profit-maximising scenario, identifying a second, off-setting, unpredictable bias that leads to heterogeneous returns to R&D investments is crucial to fully understand the drivers of corporate profits. Consistently with the Knightian theory that relates risk to profitability, we model the impact of risk and uncertainty on profits and provide a first empirical attempt to model the effect of ambiguity, a particular type of uncertainty, on R&D returns.     

Horizontal Agreements and R&D Complementarities: Merger versus RJV

We study the decision of two firms within an oligopoly concerning whether to enter into a horizontal agreement to exploit complementarities between their R&D activities and if so, whether to merge or form a research joint venture (RJV). In contrast to horizontal merger and motivated by real-world evidence, we incorporate a probability that an RJV contract will fail to enforce R&D sharing. We find that a horizontal agreement always arises in equilibrium, which is consistent with empirical findings that R&D complementarities between firms positively influence the formation of horizontal agreements. The insiders’ merger/RJV choice involves a trade-off: While merger offers certainty that R&D complementarities will be exploited, it leads to a profit-reducing reaction by outsiders on the product market, where competition is Cournot. Greater contract enforceability (quality) and R&D investment costs both favour RJV. Interestingly, the insiders may choose to merge even when RJV contracts are always enforceable, and they may opt to form an RJV even when the likelihood of enforceability is negligible. We also explore the welfare implications of the firms’ merger/RJV choice.     

Innovation and the Quality of Labour Factor: An empirical investigation in the French food industry

The aim of our paper is to analyse the determinants of the innovation propensity of the firm. Among the numerous works devoted to this subject, the interest of our research is, firstly, to use a direct measurement of innovation, instead of the usual proxies, as R&D expenditures and patents statistics, secondly, to emphasise the role of labour factor quality as a major determinant of innovation. We first build a definition of labour factor quality, based on a double dimension: individual skill level and functional distribution of jobs inside the firm. At the end we consider that each job category can be involved in the innovation process, at the different steps of it: conception, decision, implementation. To explain the innovation propensity at the firm level, our logit model takes into account four explanatory dimensions: the quality of labour factor employed inside the firm, the firm structural characteristics (as size, for instance), the sectoral market structures and, finally, the quality of labour factor employed inside the firm sector, as a proxy for the R&D spillover effect. We use some individual firms data, including a direct measurement of innovation, that distinguished between several types: radical vs. incremental and product vs. process vs. organisational innovation. The French food industries with its 500.000 employees and 42 sectors, mostly composed of small firms, are our empirical field. The results emphasise the influence of the usual firm structure variables. Firm size, particularly, is very clearly positively related to the innovation propensity. At the same time, some more original facts appears, such as the influence of firm status: after controlling the sectoral influence, co-operative firms seem to innovate less than private ones. Labour factor quality appears to play a very significant role by itself, but mostly, helps us to analyse and specify the influence of other variables on innovation. At the end, it shows that innovation is a multiphase process, and that the relative importance of each phase greatly depends on the kind of innovation that is considered. Conception is the most important phase in the radical innovation case, which greatly involves formally high-skilled job categories as R&D employees or engineers. At the same time, the implementation phase, which seems to be particularly important in the incremental innovation case, emphasises the role of the intermediate categories know-how.At the end we can say that small industrial firms appear to be less innovative for two reasons: the usual scale effect argument is correct only in the process innovation case in relation to the capital intensity level. In some other cases as radical innovation, small firms are less innovative because of their job structure and particularly because of the lack of formal scientific capabilities (as the R&D personnel's one).     

Moderators on international diversification of advanced emerging market firms

Firms from advanced emerging markets are becoming notable players in the global marketplace. This study seeks to examine how these firms expand to international markets successfully. Drawing on R&D intensity and learning capability, this study finds that an s-shaped relationship exists between firm internationalization and performance. The results also show that R&D intensity and learning capability significantly strengthen the impact of internationalization on firm performance. These results imply that R&D intensity and learning capability are the main drivers of success for firms from advanced emerging markets in foreign markets.     

Friend or foe: Customer-supplier relationships and innovation

This study provides an empirical investigation of the impact of customer-supplier relationships on firm innovation in an interorganizational framework encompassing transaction cost economics, resource dependence theory, and the theory of incomplete contracts. Using a sample of U.S. firms for the period from 1980 to 2005, this study explores how customer concentration and customer bargaining power affect a supplier's process innovation and product innovation measured with R&D-to-assets ratio and patents (also citations), respectively. The findings imply that a concentrated customer base, which reflects a strong customer-supplier relationship as well as high switching costs, motivates suppliers to invest more in R&D and become more innovative. However, the evidence also suggests that strong customer bargaining power creates hold-up problems and forces suppliers to invest less in R&D and innovation. The results are robust to sophisticated econometric techniques that control for endogeneity and suggest heterogeneous effects of business partnerships on firm innovation.     

高管团队特征与企业创新关系的实证研究--以科技型中小企业为例

本研究以天津市科技型中小企业为样本，分析了当前我国科技型中小企业高管团队异质性、专业背景、受教育水平和团队规模与企业创新的关系。研究表明，高管团队受教育水平和团队规模与企业研发投入没有显著关系，而团队职业经历的异质性和成员专业背景则与企业创新呈显著负相关和正相关关系。     

R&D Performance of UK Companies

This short article compares the R&D performance of the major British R&D spenders with that of other major R&D spenders world-wide. A performance index is constructed which adjusts actual R&D for firm size and the R&D intensity of the firm's main area of business. According to these performance measures, the R&D performance of these British firms is better than is suggested by the share of R&D in Britain's GDP. However, the article identifies a gap in British R&D performance - what may be called a third rank of R&D spenders - who are rare in Britain, but very common in Japan and the USA.     

Domestic vs. International Spillovers: Evidence from Swedish Firm Level Data

This paper investigates the association between total factor productivity growth and the R&D expenditures of Swedish manufacturing firms in the presence of domestic- and international R&D spillovers. The paper assumes that the principal channel of transmission of new technology is through I/O relations. Econometric evidence suggests that international as well as domestic inter-industry R&D spillovers are important determinants of firms’ productivity growth in the long run. The R&D spillovers generated within the industry and following I/O links seem to be of minor importance in explaining productivity growth. It seems likely that within-industry productivity spillovers follow other channels than I/O flows, such as horizontal spillovers through copying of new products and processes, or labour turnover. The use of a convergence parameter is one way to check for such within-industry technology flows. Our results indicate that a catch-up process exists by which the non-frontier firms in the Swedish manufacturing sector absorb knowledge spillovers from the leading firms in the industry. Finally, a firm’s own R&D efforts are found to be more or less positively correlated with the TFP growth, maybe the contribution from R&D efforts in some sense are underestimated.     

Does R&D intensity influence leverage? Evidence from Indian firm-level data

The paper examines the association between corporate leverage and their investment in R&D. Towards this end, it develops certain testable propositions. These propositions are tested using a dataset of manufacturing firms in India covering the period 1995?C2010. Three main results are gleaned from the analysis. First, the optimal leverage ratio typically declines with R&D intensity. Second, the financial crisis has exerted a negative effect on leverage for firms. And finally, the dampening effect of R&D intensity on leverage is the highest for foreign private firms.     

Uncertainties,Imitative Behaviours and Foreign R&D Location: Explaining the Over-concentration of Foreign R&D in Beijing and Shanghai within China

This study examines the location of foreign research and development (R&D) establishments in China and reveals that such facilities are overly concentrated in Shanghai and Beijing, the two first- tier cities. We argue that the spatial concentration of R&D in Shanghai and Beijing is more intense than what can be expected based on the spatial concentration of foreign investment, science and technology resources and general economic activities. The spatial concentration is also greater than what is observed in more developed countries. This degree of concentration cannot be convincingly explained by the conventional, rational choice model that relies mostly upon factors such as market size, labour costs and infrastructure, among others. Our analysis suggests that site location decisions are also the product of imitative behaviours among decision makers faced with uncertainties and multiple risks, particularly in a transitional economy such as China's. We further discuss the implications for second-tier cities in competition for foreign R&D investment, suggesting that these cities should aggressively market their cities to foreign investors in order to reduce the perceived risks undermining their ability to attract R&D. We also speculate that as foreign investors become more knowledgeable about the rest of China, more companies will begin to establish R&D facilities in such second-tier cities.