Management Control and Innovative Activity
Centre for European Economic Research (ZEW); Catholic University of Leuven (KUL)
University of Dortmund - Department of Economics; Institute for the Study of Labor (IZA)
Review of Industrial Organization, Vol. 24, No. 1, pp. 1-24
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 4,126 observations is used to estimate Tobit and semi-parametric 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.
Keywords: Censored Regression Models, Incentives, Innovative Activity, Managerial versus Owner-led Firms
JEL Classification: C14, C24, D21, O31, O32Accepted Paper Series
Date posted: January 3, 2005
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