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Financial munificence, R&D intensity, and new venture survival: critical roles of CEO attributes

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  • Aric Xu Wang

    (Sun Yat-sen University)

  • Kevin Zheng Zhou

    (The University of Hong Kong)

Abstract

Although financial resources are critical to new ventures, is having more of them always a good thing? Intrigued by industry observations and building on behavioral research into the limitations of munificent resources, we argue that financial munificence can have a negative moderating effect on the impact of R&D investment on venture survival. We further propose that three CEO attributes (i.e., work experience, education, and gender) can mitigate this negative moderating effect. Analyses of a six-year longitudinal dataset of 791 new technology ventures provide strong support for our hypotheses. We contribute to the behavioral research on how resource munificence matters for new ventures by examining the indirect downside of financial munificence and demonstrating how certain CEO attributes can mitigate this effect.

Suggested Citation

  • Aric Xu Wang & Kevin Zheng Zhou, 2022. "Financial munificence, R&D intensity, and new venture survival: critical roles of CEO attributes," Small Business Economics, Springer, vol. 59(4), pages 1641-1659, December.
    • Handle: RePEc:kap:sbusec:v:59:y:2022:i:4:d:10.1007_s11187-021-00592-4
    DOI: 10.1007/s11187-021-00592-4
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    2. Artamoshina, Polina & Shirokova, Galina & Osiyevskyy, Oleksiy & Bodolica, Virginia, 2023. "ADHD symptoms of CEOs and business model innovation in the SME context," Technovation, Elsevier, vol. 128(C).

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    More about this item

    Keywords

    Financial munificence; R&D intensity; New venture survival; Behavioral theory of the firm; CEO attributes;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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