R&D Investments in Family and Founder Firms: An Agency Perspective

Journal of Business Venturing, Vol. 27, No. 2, pp. 248-265, 2012

41 Pages Posted: 4 Oct 2007 Last revised: 25 Oct 2014

See all articles by Jorn H. Block

Jorn H. Block

University of Trier - Faculty of Management; Erasmus University Rotterdam (EUR) - Institute of Management (ERIM)

Date Written: January 5, 2012

Abstract

Investments in R&D can influence a firm’s ability to develop new products and to create and adopt innovative technologies that may enhance productivity. However, due to uncertainty regarding the outcome, investments in R&D may lead to an agency problem between the owners and the managers of a firm. Family and founder firms are often considered to be different in their agency situation than other firms, which may have an influence on R&D investments. This paper analyzes R&D spending in family and founder firms versus other firms. The results show that while family ownership decreases the level of R&D intensity, ownership by lone founders has a positive effect not only on R&D intensity but also on the level of R&D productivity. The paper contributes to the understanding of the role of entrepreneurship in making high risk/high return R&D decisions.

Keywords: Family Firms, Lone Founder Firms, R&D Spending, Entrepreneurial Orientation, Agency Theory, Family Altruism

JEL Classification: C11, D21, G31, G32, L20, M31, O32

Suggested Citation

Block, Jorn Hendrich, R&D Investments in Family and Founder Firms: An Agency Perspective (January 5, 2012). Journal of Business Venturing, Vol. 27, No. 2, pp. 248-265, 2012, Available at SSRN: https://ssrn.com/abstract=1019208

Jorn Hendrich Block (Contact Author)

University of Trier - Faculty of Management ( email )

D-54296
Germany

Erasmus University Rotterdam (EUR) - Institute of Management (ERIM) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

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