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Management Control and Innovative Activity

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  • Czarnitzki, Dirk
  • Kraft, Kornelius

Abstract

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 presents empirical results concerning this question. A sample of German firms with 3,978 observations is used and it turns out that the owner-led firms invest less into R&D than the managerial firms. With respect to the managerled firms, expenditures on R&D depend on the control exerted. If capital shares are widely dispersed and managers are thus only controlled a little by owners, they invest more into R&D. Owner-led firms and managers who are strongly controlled have a very similar R&D intensity.

Suggested Citation

  • Czarnitzki, Dirk & Kraft, Kornelius, 2000. "Management Control and Innovative Activity," ZEW Discussion Papers 00-68, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:5350
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    References listed on IDEAS

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    More about this item

    Keywords

    Innovative Activity; Managerial versus Owner-led Firms; Incentives; Tobit Regression;
    All these keywords.

    JEL classification:

    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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