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How outside directors facilitate corporate R&D investment? Evidence from large Korean firms

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  • Yoo, Taeyoung
  • Sung, Taeyoon

Abstract

This paper examines how outside directors facilitate corporate R&D investment in the face of family control and the discrepancy between share ownership and decision control. Our panel regression analysis of large Korean firms (1998 to 2005) shows that mere addition of a shareholder-oriented mechanism, namely outside directors, is not effective for promoting R&D intensity. However, the disciplining role of outside directors can become valid for R&D intensity by moderating the negative influence of the discrepancy when a firms' growth opportunity is high. In addition, family control is positively related to a firm's R&D investment when the firm's growth opportunity is low. Thus, we argue that the strategic management of organizational change in corporate governance should take into account the disciplining role of shareholder-oriented mechanisms in the context of ownership structure and a firm's strategic position.

Suggested Citation

  • Yoo, Taeyoung & Sung, Taeyoon, 2015. "How outside directors facilitate corporate R&D investment? Evidence from large Korean firms," Journal of Business Research, Elsevier, vol. 68(6), pages 1251-1260.
  • Handle: RePEc:eee:jbrese:v:68:y:2015:i:6:p:1251-1260
    DOI: 10.1016/j.jbusres.2014.11.005
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    References listed on IDEAS

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    Cited by:

    1. Galloway, Tera L. & Miller, Douglas R. & Sahaym, Arvin & Arthurs, Jonathan D., 2017. "Exploring the innovation strategies of young firms: Corporate venture capital and venture capital impact on alliance innovation strategy," Journal of Business Research, Elsevier, vol. 71(C), pages 55-65.
    2. Bauweraerts, Jonathan & Colot, Olivier, 2017. "Exploring nonlinear effects of family involvement in the board on entrepreneurial orientation," Journal of Business Research, Elsevier, vol. 70(C), pages 185-192.
    3. Röd, Irina, 2016. "Disentangling the family firm’s innovation process: A systematic review," Journal of Family Business Strategy, Elsevier, vol. 7(3), pages 185-201.
    4. Guldiken, Orhun & Darendeli, Izzet Sidki, 2016. "Too much of a good thing: Board monitoring and R&D investments," Journal of Business Research, Elsevier, vol. 69(8), pages 2931-2938.
    5. repec:taf:apbizr:v:23:y:2017:i:1:p:116-134 is not listed on IDEAS
    6. repec:kap:asiapa:v:35:y:2018:i:3:d:10.1007_s10490-017-9553-9 is not listed on IDEAS
    7. repec:zbw:espost:173674 is not listed on IDEAS

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