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Management Control and Innovative Activity

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  • Dirk Czarnitzki
  • Kornelius Kraft

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 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.

Suggested Citation

  • Dirk Czarnitzki & Kornelius Kraft, 2004. "Management Control and Innovative Activity," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 24(1), pages 1-24, February.
    • Handle: RePEc:kap:revind:v:24:y:2004:i:1:p:1-24
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    More about this item

    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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