IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v13y2021i9p5014-d546364.html

Corporate Governance vs. Financial Performance for Intensity of Innovation Investments

Author

Listed:
  • Raminta Benetyte

    (Kaunas University of Technology, School of Economics and Business, 44249 Kaunas, Lithuania)

  • Halit Gonenc

    (University of Groningen, Faculty of Economics and Business, 9712 CP Groningen, The Netherlands)

  • Rytis Krusinskas

    (Kaunas University of Technology, School of Economics and Business, 44249 Kaunas, Lithuania)

Abstract

In a rapidly changing technology world, companies need to conform to their customers’ expectations if they wish to remain competitive in the marketplace. New products, services, processes, marketing, management, and organizational innovation can all be tools to keep companies competitive. Research and development (R&D) expenditure is a critical component in the development of a design process. According to the scientific literature, corporate governance and financial performance can be essential variables with a significant impact on the innovation process. By acting transparently and honestly with all stakeholders (employees, suppliers, customers, creditors, government, community), companies can ensure and enhance the economic sustainability of the whole country through efficient management of financial resources and work toward high value-added innovation. Therefore, the aim of this work was to analyze whether corporate governance and financial performance affect the development of corporate innovation investments and, at the same time, the sustainability of the country’s economy. Additionally, this research proposes a methodology for integrated assessment of corporate innovation investments in the context of economic sustainability, aimed at companies and countries for more efficient investment in innovation and sustainable development outcomes. The object of the research was corporate innovation investment intensity as the driver for economic sustainability. An evaluation methodology for integrated assessment of corporate innovation investment can be used as an instrument for the stimulation of business innovation and strategic development of a country’s economy. The evaluation methodology of integrated assessment of corporate innovation investments can be utilized to evaluate different companies and governments. Evidence-based empirical calculations show that synchronized corporate governance and financial performance influence the intensity of corporate innovation investments in the context of economic sustainability.

Suggested Citation

  • Raminta Benetyte & Halit Gonenc & Rytis Krusinskas, 2021. "Corporate Governance vs. Financial Performance for Intensity of Innovation Investments," Sustainability, MDPI, vol. 13(9), pages 1-13, April.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:9:p:5014-:d:546364
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/13/9/5014/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/13/9/5014/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Posner, Stephen M. & Costanza, Robert, 2011. "A summary of ISEW and GPI studies at multiple scales and new estimates for Baltimore City, Baltimore County, and the State of Maryland," Ecological Economics, Elsevier, vol. 70(11), pages 1972-1980, September.
    2. Bernile, Gennaro & Bhagwat, Vineet & Yonker, Scott, 2018. "Board diversity, firm risk, and corporate policies," Journal of Financial Economics, Elsevier, vol. 127(3), pages 588-612.
    3. Andreas Hoepner & Ioannis Oikonomou & Bert Scholtens & Michael Schröder, 2016. "The Effects of Corporate and Country Sustainability Characteristics on The Cost of Debt: An International Investigation," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 43(1-2), pages 158-190, January.
    4. Shen, Huayu & Zheng, Shaofeng & Xiong, Hao & Tang, Wenjie & Dou, Jiachun & Silverman, Henry, 2021. "Stock market mispricing and firm innovation based on path analysis," Economic Modelling, Elsevier, vol. 95(C), pages 330-343.
    5. Sheikh, Shahbaz, 2018. "The impact of market competition on the relation between CEO power and firm innovation," Journal of Multinational Financial Management, Elsevier, vol. 44(C), pages 36-50.
    6. Drews, Stefan & Antal, Miklós & van den Bergh, Jeroen C.J.M., 2018. "Challenges in Assessing Public Opinion on Economic Growth Versus Environment: Considering European and US Data," Ecological Economics, Elsevier, vol. 146(C), pages 265-272.
    7. Tomaselli, Maria Fernanda & Sheppard, Stephen R.J. & Kozak, Robert & Gifford, Robert, 2019. "What do Canadians think about economic growth, prosperity and the environment?," Ecological Economics, Elsevier, vol. 161(C), pages 41-49.
    8. Ullah, Barkat, 2019. "Firm innovation in transition economies: The role of formal versus informal finance," Journal of Multinational Financial Management, Elsevier, vol. 50(C), pages 58-75.
    9. Lucian Bebchuk & Alma Cohen & Allen Ferrell, 2009. "What Matters in Corporate Governance?," The Review of Financial Studies, Society for Financial Studies, vol. 22(2), pages 783-827, February.
    10. Khan, Irfan & Hou, Fujun & Zakari, Abdulrasheed & Tawiah, Vincent Konadu, 2021. "The dynamic links among energy transitions, energy consumption, and sustainable economic growth: A novel framework for IEA countries," Energy, Elsevier, vol. 222(C).
    11. Lehn, Kenneth, 2021. "Corporate governance and corporate agility," Journal of Corporate Finance, Elsevier, vol. 66(C).
    12. Sumin Hu & Shulin Liu & Die Li & Yuxuan Lin, 2019. "How Does Regional Innovation Capacity Affect the Green Growth Performance? Empirical Evidence from China," Sustainability, MDPI, vol. 11(18), pages 1-21, September.
    13. Cho, Sam Yul & Kim, Sang Kyun, 2017. "Horizon problem and firm innovation: The influence of CEO career horizon, exploitation and exploration on breakthrough innovations," Research Policy, Elsevier, vol. 46(10), pages 1801-1809.
    14. Chen, Xiafei & Liu, Zhiying & Zhu, Qingyuan, 2018. "Performance evaluation of China's high-tech innovation process: Analysis based on the innovation value chain," Technovation, Elsevier, vol. 74, pages 42-53.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xu, Chuanxin & Jiang, Yingbing, 2024. "Impact of online communication on the ambidextrous innovation investment of enterprises," International Review of Economics & Finance, Elsevier, vol. 94(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nadia Loukil & Ouidad Yousfi, 2022. "Do CEO’s traits matter in innovation outcomes?," Journal of International Entrepreneurship, Springer, vol. 20(3), pages 375-403, September.
    2. Sheikh, Shahbaz, 2018. "Corporate social responsibility, product market competition, and firm value," Journal of Economics and Business, Elsevier, vol. 98(C), pages 40-55.
    3. Bell, Christopher & Rhodes, Ekaterina & Long, Zoe & Salemi, Colette, 2025. "Do economic trade-offs matter in climate policy support? Survey evidence from the United Kingdom and Australia," Energy Policy, Elsevier, vol. 197(C).
    4. Sheikh, Shahbaz, 2018. "CEO power, product market competition and firm value," Research in International Business and Finance, Elsevier, vol. 46(C), pages 373-386.
    5. Christopher Kurzhals & Lorenz Graf‐Vlachy & Andreas König, 2020. "Strategic leadership and technological innovation: A comprehensive review and research agenda," Corporate Governance: An International Review, Wiley Blackwell, vol. 28(6), pages 437-464, November.
    6. Jaehong Lee & Eunsoo Kim, 2020. "The Influence of Corporate Environmental Responsibility on Overinvestment Behavior: Evidence from South Korea," Sustainability, MDPI, vol. 12(5), pages 1-20, March.
    7. McNeil, Andrew & Barnes, Lucy, 2025. "The environment–economic growth trade-off: does support for environmental protection depend on its economic consequences?," Ecological Economics, Elsevier, vol. 230(C).
    8. Baulkaran, Vishaal & Bhattarai, Sagar, 2020. "Board effectiveness: Evidence from firm risk," Journal of Economics and Business, Elsevier, vol. 110(C).
    9. Fich, Eliezer M. & Parrino, Robert & Tran, Anh L., 2023. "When and how are rule 10b5-1 plans used for insider stock sales?," Journal of Financial Economics, Elsevier, vol. 149(1), pages 1-26.
    10. Khan, Irfan & Hou, Fujun & Irfan, Muhammad & Zakari, Abdulrasheed & Le, Hoang Phong, 2021. "Does energy trilemma a driver of economic growth? The roles of energy use, population growth, and financial development," Renewable and Sustainable Energy Reviews, Elsevier, vol. 146(C).
    11. Al Dah, Bilal & Dah, Mustafa A. & Stathopoulos, Konstantinos, 2026. "Rookie directors and board efficacy," Journal of Corporate Finance, Elsevier, vol. 96(C).
    12. Georgios Chortareas & Fangyuan Kou & Alexia Ventouri, 2024. "Corporate pollution and reputational exposure," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 33(2), pages 149-178, May.
    13. Bhagat, Sanjai & Bolton, Brian, 2019. "Corporate governance and firm performance: The sequel," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 142-168.
    14. Dah, Mustafa A., 2025. "Refreshing boards: Countering CEO entrenchment," Research in International Business and Finance, Elsevier, vol. 75(C).
    15. Savin, Ivan & Drews, Stefan & van den Bergh, Jeroen, 2021. "GEM: A short “Growth-vs-Environment” Module for survey research," Ecological Economics, Elsevier, vol. 187(C).
    16. Wu, Kai & Zhang, Yue & Li, Donghui, 2026. "Onsite oversight: Institutional site visits and stock return volatility," Research in International Business and Finance, Elsevier, vol. 81(C).
    17. Abu Amin & Ashrafee T. Hossain & Abdullah‐Al Masum, 2024. "Carbon emissions and abnormal cash holdings," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(4), pages 3175-3209, December.
    18. Shabir, Mohsin & Jiang, Ping & Shahab, Yasir & Wang, Peng, 2023. "Geopolitical, economic uncertainty and bank risk: Do CEO power and board strength matter?," International Review of Financial Analysis, Elsevier, vol. 87(C).
    19. Hamad Aldawsari & Taufiq Choudhry & Di Luo, 2025. "CEO power and firm risk at the onset of the 2007 financial crisis and the COVID-19 health crisis: international evidence," Review of Quantitative Finance and Accounting, Springer, vol. 64(4), pages 1633-1670, May.
    20. Liao, Shushu & Nguyen, Nhut H. & Truong, Cameron, 2024. "Does CEO extraversion pay off when in need? Evidence from the global financial crisis," The British Accounting Review, Elsevier, vol. 56(4).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:13:y:2021:i:9:p:5014-:d:546364. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.