Employee stock ownership and corporate R&amp;D expenditures: evidence from Taiwan's information-technology industry

Chen, Hsiang‐Lan; Huang, Yu-Hsi

doi:10.1007/s10490-006-9005-4

Cited by 47 publications

(46 citation statements)

References 45 publications

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“…While expropriation of minority shareholders arguably is unjust in its own right, PP conflicts also affect organizational performance and competitiveness by corrupting firm strategy (Filatotchev et al., 2001; Lins, 2003). Examples of actions that harm competitiveness include: (1) placing unqualified family members, friends, and cronies in key positions while overlooking better qualified candidates (Faccio et al., 2001); (2) purchasing supplies and materials at above‐market prices or selling products and services at below‐market prices to organizations owned by, or associated with, controlling shareholders (Chang and Hong, 2000; Khanna and Rivkin, 2001); (3) engaging in strategies which advance personal, family, or political agendas at the expense of firm performance such as excessive diversification (Backman, 1999); and (4) lower expenditure for innovation (Chen and Huang, 2006; Morck et al., 2005). Such actions are more likely to happen in emerging economies where legal and regulatory institutions are less developed.…”

Section: Organizational Consequencesmentioning

confidence: 99%

Corporate Governance in Emerging Economies: A Review of the Principal–Principal Perspective

Young

Peng²,

Ahlström

et al. 2008

J Management Studies

1,483

1,404

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Instead of traditional principal-agent conflicts espoused in most research dealing with developed economies, principal-principal conflicts have been identified as a major concern of corporate governance in emerging economies. Principal-principal conflicts between controlling shareholders and minority shareholders result from concentrated ownership, extensive family ownership and control, business group structures, and weak legal protection of minority shareholders. Such principal-principal conflicts alter the dynamics of the corporate governance process and, in turn, require remedies different from those that deal with principal-agent conflicts. This article reviews and synthesizes recent research from strategy, finance, and economics on principal-principal conflicts with an emphasis on their institutional antecedents and organizational consequences. The resulting integration provides a foundation upon which future research can continue to build. Copyright Blackwell Publishing Ltd 2008.

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Section: Organizational Consequencesmentioning

confidence: 99%

Corporate Governance in Emerging Economies: A Review of the Principal–Principal Perspective

Young

Peng²,

Ahlström

et al. 2008

J Management Studies

1,483

1,404

View full text Add to dashboard Cite

show abstract

“…Moreover, key personnel are important for developing protocols that lead to successful innovations (Balkin et al, 2000). Interlocking directorate ties allow directors to build valuable connections with actors in the external environment (Kroll et al, 2007), from which firms may secure talented professionals to support R&D by reporting the needs, opportunities, and problems in the industry and by sharing specific technologies (Chen & Huang, 2006). Financial resources are also essential for firms to be able to make the necessary investments to develop effective R&D capabilities (Dalziel et al, 2011).…”

Section: Resource Dependence Theory: Board Capital and Randd Investmentmentioning

confidence: 99%

Board Capital,CEOPower andR&DInvestment in Electronics Firms

Chen

2014

Corporate Governance

Self Cite

186

145

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Manuscript Type Empirical Research Question/Issue Building on resource dependence theory, this paper examines the effect of board capital and the moderating effect of CEO power on R&D investment. Research Findings/Insights Based on a panel of electronics firms in Taiwan, the results indicate that board capital (directors' educational level, directors' industry‐specific experience and interlocking directorate ties) has a positive effect on R&D investment and that CEO power positively moderates this effect. The empirical evidence suggests that when powerful CEOs are present, directors with human and social capital will devote more effort to providing valuable strategic advice and resources and thus will support R&D investment to enhance innovative capabilities. Theoretical/Academic Implications This study contributes to knowledge on corporate governance by bridging the gap in the relationship between board capital and R&D investment via an empirical inquiry into the influence of CEO power on a board's resource provision. The findings suggest that research aiming to elucidate the resource dependence role of board capital in shaping R&D investment should consider the potential moderating role of CEO power. Thus, this study should not only supplement the resource dependence literature by providing a more thorough understanding of the relationship between board capital and R&D investment but also delve into the black box of CEO‐board relations, an important topic within corporate governance research. Practitioner/Policy Implications This study suggests that when the boards of firms competing in innovation through R&D investment (e.g., electronics firms) search for new board members, they should consider the educational level, industry‐specific experience and interlocking directorate ties of potential directors and how those potential directors complement or reinforce the existing board in order to enhance their ability to obtain valuable strategic information and substantial resources that would facilitate better R&D investment decisions. Additionally, those R&D firms may be advised to have a combination of a powerful CEO and a board consisting of directors with more education, directors with industry‐specific experience and directors with interlocking directorate ties because the presence of a powerful CEO may motivate directors to provide ongoing advice and resources, leading to increased R&D investment necessary to enhance innovation capabilities.

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“…Agency theory focuses on the relationships that emerge when principals (i.e., owners) hire agents (i.e., managers) who are responsible for organizational administration (Jensen and Meckling 1976). Agency problems begin to arise if managers and owners have divergent goals and risk preferences that consequently lead to conflicts of interest in strategic decisions (Chen and Huang 2006). From the agency theory perspective, ownership structure can affect managerial behaviors and strategic choices (Chen and Hsu 2009;Miller, Le Breton-Miller, and Lester 2011).…”

Section: Agency Theory and Resource-based Viewmentioning

confidence: 99%

Family Ownership, Institutional Ownership, and Internationalization of SMEs

Chen¹,

Hsu²,

Chang³

2013

Journal of Small Business Management

Self Cite

106

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Family ownership has been recognized as an important determinant of corporate strategic choices; however, little research investigates the effects of family ownership and corporate governance on internationalization in small and medium‐sized enterprises (SMEs). This paper utilizes agency theory and the resource‐based view to analyze the relationships between family ownership, institutional ownership, and internationalization. Using a sample of Taiwanese SMEs, the finding of a positive family ownership–internationalization relationship suggests that family ownership may encourage internationalization. The interaction of family ownership and institutional ownership is positively related to internationalization, suggesting that SMEs with high family ownership are more likely to internationalize as institutional ownership increases.

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Employee stock ownership and corporate R&D expenditures: evidence from Taiwan's information-technology industry

Abstract: Employee stock ownership, R&D expenditures, Agency theory, G31, M52,

Cited by 47 publications

References 45 publications

Corporate Governance in Emerging Economies: A Review of the Principal–Principal Perspective

Corporate Governance in Emerging Economies: A Review of the Principal–Principal Perspective

Board Capital,CEOPower andR&DInvestment in Electronics Firms

Family Ownership, Institutional Ownership, and Internationalization of SMEs

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