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R&D investment around the world: Effects of ownership and performance‐based cultural contexts
Author(s) -
Lewellyn Krista B.,
Bao Rosey ‘Shuji’
Publication year - 2020
Publication title -
thunderbird international business review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.553
H-Index - 37
eISSN - 1520-6874
pISSN - 1096-4762
DOI - 10.1002/tie.22187
Subject(s) - shareholder , investment (military) , corporation , business , institution , agency (philosophy) , open ended investment company , sample (material) , investment performance , finance , economics , accounting , return on investment , microeconomics , corporate governance , politics , sociology , law , social science , chemistry , chromatography , production (economics) , political science
This study examines how ownership by different types of shareholders affects firm‐level research and development (R&D) investment. Integrating agency and resource dependence theories, we predict that up to a certain level, firm ownership by banks, corporations, governments, and insiders will positively relate to R&D investment. However, as ownership continues to increase, these shareholders shift their focus to personal wealth concerns, which makes owners more conservative towards R&D investment, resulting in reductions of R&D investment. Applying an institution‐based view, we expect the norms associated with performance‐based national cultures to moderate the curvilinear relationships between ownership and R&D investment. We test our hypotheses with a sample of 11,262 firms from 35 countries and find that ownership by banks, corporations, and governments has a curvilinear inverted U‐shaped relationship with R&D investment. Further, operating in a performance‐based culture enhances the effects for corporation and government ownership. Our findings contribute unique insights about what drives the important strategic activity of investing in R&D.