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Management Control and Innovative Activity

  • Dirk Czarnitzki

    ()

  • Kornelius Kraft

This paper discusses theoretically the different incentives of managers versus firm owners to invest in innovative activities. There are opposing effects concerning R & D intensity in the manager-controlled firm. Our study on the determinants of R & D intensity presentsempirical results concerning this question. A sample of German firms with 4,126 observations is used to estimate Tobit and semiparametric censored least absolute deviation (CLAD) models. It turns out that the owner-led firms invest less into R & D than the managerial firms. With respect to the manager-led firms, we have mixed results concerning the question whether expenditures on R & D depend on the control exerted.

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Article provided by Springer & The Industrial Organization Society in its journal Review of Industrial Organization.

Volume (Year): 24 (2004)
Issue (Month): 1 (02)
Pages: 1-24

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Handle: RePEc:kap:revind:v:24:y:2004:i:1:p:1-24
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  1. Klaus M. Schmidt, 1997. "Managerial Incentives and Product Market Competition," Review of Economic Studies, Oxford University Press, vol. 64(2), pages 191-213.
  2. Acs, Zoltan J & Audretsch, David B, 1988. "Innovation in Large and Small Firms: An Empirical Analysis," American Economic Review, American Economic Association, vol. 78(4), pages 678-90, September.
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  12. repec:sae:ilrrev:v:43:y:1990:i:3:p:30-51 is not listed on IDEAS
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  14. Leech, D. & Leahy, J., 1989. "Ownership Structure, Control Type Classifications And The Performance Of Large British Companies," The Warwick Economics Research Paper Series (TWERPS) 345, University of Warwick, Department of Economics.
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