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

  • Block, Joern H.

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.

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Article provided by Elsevier in its journal Journal of Business Venturing.

Volume (Year): 27 (2012)
Issue (Month): 2 ()
Pages: 248-265

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Handle: RePEc:eee:jbvent:v:27:y:2012:i:2:p:248-265
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