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Innovation intensity of military-connected firms

Author

Listed:
  • Iman Harymawan
  • Fajar Kristanto Gautama Putra
  • Amalia Rizki
  • Mohammad Nasih

Abstract

Purpose - The study aims to examine the military-connected firms' risk preference, specifically in the innovation intensity level context. The authors argue that firms with military-experienced top management have conservative and risk-averse behavior, influencing the innovation investment policy. Design/methodology/approach - The authors use nonfinancial Indonesian-listed firms from 2010 to 2018 amounted to 2,504 firm-year observations. Findings - The authors document a negative relationship between military connection with both innovation activities and outputs. The additional analysis documents that risk-preferences of military-connected firms will be drastically changed when the industry has a high digital level, which confirms that risk-averse military-experienced management is less dominant with adaptation skill. The authors also identify that veterans did not need a long tenure to influence firms' innovation investment policy. Lastly, the result is robust due to various endogeneity tests employed. Originality/value - This study further examines military-connected firms' technological innovation compared to prior studies and enriches the related literature.

Suggested Citation

  • Iman Harymawan & Fajar Kristanto Gautama Putra & Amalia Rizki & Mohammad Nasih, 2021. "Innovation intensity of military-connected firms," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 18(2), pages 365-397, June.
    • Handle: RePEc:eme:ijmfpp:ijmf-12-2020-0616
    DOI: 10.1108/IJMF-12-2020-0616
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