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Does director interlock impact corporate R&D investment?

Authors:

Gaoliang TianAuthors Info & Claims

Decision Support Systems, Volume 71, Issue C

Pages 28 - 36

https://doi.org/10.1016/j.dss.2015.01.001

Published: 01 March 2015 Publication History

Abstract

This paper investigates the effect of director interlock on corporate research & development (R&D) investment from the perspective of inter-organizational imitation. We argue that managers will imitate the R&D investment intensity of their interlocked-firms when deciding how much to spend in R&D for their own firm. Following prior literature, we further argue that under different types of interlocking director and industry characteristics, the impact of director interlock on corporate R&D spending is different. Using a sample of public firms listed in Chinese Shanghai and Shenzhen Stock Exchanges, our empirical results show that managers imitate the prior R&D investment intensity of their interlock partners, and the impact of director interlock on corporate R&D intensity is stronger when the interlocking director is an inside director in the focal firm or when the focal firm and interlock firm belong to the same industry. Our results still hold when we account for the potential sample selection bias, firm similarity, and the confounding factors that can contribute through unobserved industry characteristics. We study the impact of director interlock on R&D investment for firms.Chinese public firms imitate R&D investment of their interlock partners.Imitation effect is stronger when interlocking director is an insider.Firms in the same industry show stronger impact of interlocking on R&D investment.

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Cited By

Guo BDing P(2017)Invention or incremental improvement? Simulation modeling and empirical testing of firm patenting behavior under performance aspirationDecision Support Systems10.1016/j.dss.2017.07.001102:C(32-41)Online publication date: 1-Oct-2017
https://dl.acm.org/doi/10.1016/j.dss.2017.07.001

Does director interlock impact corporate R&D investment?
1. Applied computing
  1. Enterprise computing
  2. Law, social and behavioral sciences

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cover image Decision Support Systems

Decision Support Systems Volume 71, Issue C

March 2015

88 pages

ISSN:0167-9236

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Copyright © Elsevier B.V.

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Elsevier Science Publishers B. V.

Netherlands

Publication History

Published: 01 March 2015

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Cited By

Guo BDing P(2017)Invention or incremental improvement? Simulation modeling and empirical testing of firm patenting behavior under performance aspirationDecision Support Systems10.1016/j.dss.2017.07.001102:C(32-41)Online publication date: 1-Oct-2017
https://dl.acm.org/doi/10.1016/j.dss.2017.07.001

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