By Lijun Liu
Management School, Jinan University, Guangzhou, China
Image Attribute: chinatopix.com
In the study of the impact of Research and Development (R&D) investment from the company itself, this article mainly examines the impact of corporate governance mechanisms, human resources, financial conditions and other internal factors on R&D investment.
On the impact of corporate governance mechanism on corporate R&D investment, many domestic scholars have studied from the perspective of the size of the board of directors, executive incentive mechanism, ownership concentration and equity. Evidence from China Gem enterprise data shows that the number of board members and the proportion of executive stock ownership can promote the research and development strength (Liu Xiaoyuan & Li Yongzhuang, 2012). By using the world bank survey data on China’s manufacturing enterprises in 1483, Li Chuntao studied the effect of executive compensation incentive on R & D investment under different ownership structure, which found that the state-owned enterprise is higher than the private enterprise in the R&D intensity, and the manager’s salary incentive can promote the innovation of the enterprise (Li Chuntao & Song Min, 2010). Furthermore, research on Chinese Listed Companies demonstrate that high tech listed companies implementing executive stock incentive are tending to promote their R&D investment (Tang Qingquan & Xie Weimin, 2013), but there is no significant positive correlation between institutional ownership and R & D investment, and the impact of different institutional investors on R & D investment is different (Li Yingzhao & Wu Jihui, 2013). Wen Fang studied R & D data from China listed companies, and found that the incentive effects of equity type on listed company R&D investment intensity ranked from strong to weak: private property holdings, holdings of state-owned enterprises directly under the central government, the local state-owned holding enterprises, state-owned assets management institutions holding (Wen Fang, 2008). In addition, evidence from listed manufacturing and IT industry companies shows that the R&D intensity of state-controlled listed companies is significantly lower than that of non-state-owned listed companies.
From the perspective of human resources, top management team has become the main research subject. In view of Luo Zhengying (Luo Zhengying, Tang Lingling, & Chang E, 2013), the average age of the top management team has no significant impact on R & D investment, but their average tenure is negatively correlated with corporate R & D, and the proportion of the team members with technical background and corporate R&D investment was positively correlated. Besides, the number of R&D personnel and R&D investment is positively related and the number of R&D personnel changes in R&D investment is significantly positive correlation.
Another main focus of the research on the factors influencing the R&D investment is the financial situation of the enterprise. Insight from China small board listed companies demonstrates that the more redundant financial resources the company possesses the harder it will promote R&D investment. On the other hand, strict corporate financial control may hinder company’s R&D investment, the corporate debt ratio is negatively correlated with R&D investment, corporate profits have significant positive correlation with R&D intensity of private enterprises and foreign-funded enterprises, but the state-owned enterprises are not significant (Cheng Liwei & Dai Xiaoyong, 2012).
Other Internal Factors:
In fact, the size of the enterprise also directly affects the ability of research and development and affects the R&D input. According to Jiang Tao’s research, there is a positive correlation between R&D investment and firm size (Jiang Tao, 2013). Besides, based on data from 1465 A -stock companies from 2010-2013, Jiang Nanchun’s study shows that earnings per share have significant positive correlation with R&D intensity while asset-liability ratio has significant negative correlation with R & D intensity (Jiang Nanchun, 2015).
Download the Paper - LINK
1. Cheng Liwei, & Dai Xiaoyong. 成力为, 戴小勇. (2012). Analysis of the Distribution Characteristics of R & D Investment and the Influencing Factors of R & D Investment Intensity Based on Panel Data of 300 Thousand Industrial Enterprises in China 研发投入分布特征与研发投资强度影响因素的分析—基于我国30万个工业企业面板数据. Chinese Journal of Soft Science, 8. [Paper reference 1]
2. Jiang Tao. 蒋涛. (2013). Research on the Internal Factors of Enterprise R & D Investment企业研发投入内部影响因素研究. Shopping Mall Modernization, 7, 120. [Paper reference 1]
3. JiangNanchun. 江南春. (2015). An Empirical Study on the Factors That Affect the Strength of R & D Investment of Listed Companies Based on Endogeneity 基于内生性的上市公司研发投入强度影响因素实证研究. Business Economics Research, 30, 108-110. [Paper reference 1]
4. Li Chuntao, & Song Min. 李春涛, 宋敏. (2010). Innovation Activities of Chinese Manufacturing Enterprises: The Role of Ownership and CEO Incentives 中国制造业企业的创新活动: 所有制和CEO激励的作用. Economic Research, 5. [Paper reference 1] 5. Li Yingzhao, & Wu Jihui. 李映照, 吴济慧. (2013). Research on the Relationship between Institutional Investors and R & D Investment 机构投资者与R & D投入关系研究. Science and Technology Management Research, 23. [Paper reference 1]
6. Liu Xiaoyuan, & Li Yongzhuang. 刘小元, 李永壮. (2012). Research and Development Intensity of Entrepreneurial Firms under the Influence of Board of Directors, Resource Constraints and Innovation Environment 董事会、资源约束与创新环境影响下的创业企业研发强度. Soft Science, 6. [Paper reference 1]
7. Luo Zhengying, Tang Lingling, & Chang E. 罗正英, 汤玲玲, 常嫦. (2013). The Executive Team of Human Capital, Incentive Mechanism and Corporate R & D Investment 高管团队人力资本、激励机制与企业研发投入. Journal of Soochow University, 3. [Paper reference 1]
8. Tang Qingquan, & Xie Weimin. 唐清泉, 解维敏. (2013). Executive Stock Ownership and Enterprise Innovation: Empirical Evidence from Chinese Listed Companies 高管持股与企业创新—来自中国上市公司的经验证据. Modern Management Science, 3, 6-8. [Paper reference 1]
9. Wen Fang. 文芳. (2008). Ownership Concentration, Equity Balance and Corporate R & D Investment: Empirical Evidence from Listed Companies in China 股权集中度、股权制衡与公司R & D投资—来自中国上市公司的经验证据. Southern Economy, 4. [Paper reference 1] 10. Zhao Yuehong, & Xu Min. 赵月红, 许敏. (2013). RD Investment Impact on Corporate Performance—Based on 2006 Listed Companies in Yangtze River Delta—Panel Data of 2010 R & D投入对企业绩效影响的研究—基于长三角上市公司2006-2010年的面板数据. Study on the Management of Science and Technology, 12. [Paper reference 1]
Copyright © 2017 by author and Scientific Research Publishing Inc.
This work is licensed under the Creative Commons Attribution International License (CC BY 4.0).http://creativecommons.org/licenses/by/4.0/