Ghafoor S, Zulfiqar M, Wang M, Wang C, Islam MR. Behavioural Phenomena of Family Firm
Control Diversity and R&D Investment with Moderating Role CEO Compensation.
Psychol Res Behav Manag 2023;
16:397-417. [PMID:
36819007 PMCID:
PMC9936884 DOI:
10.2147/prbm.s383279]
[Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [Track Full Text] [Download PDF] [Figures] [Journal Information] [Subscribe] [Scholar Register] [Received: 07/21/2022] [Accepted: 12/23/2022] [Indexed: 02/16/2023] Open
Abstract
Purpose
The novel study describes the behXavioural phenomena of family firm types and explores the relationship between the family firm types of control diversity and Research and Development (R&D) investments. Acquiring controlling rights is a psychological phenomenon for family firm owners. The moderating effect of CEO compensations on R&D investments is investigated.
Methodology
We collected data of listed A-share family firms in China from 2011 to 2020 in the China Stock Market and Accounting Research database. We used Tobit regression for data analysis.
Results/Finding
The study concludes that lone-controller family firms (LCFFs) are less willing to invest in R&D and multi-controller family firms (MCFFs) have positive behaviour towards R&D. The moderating role of CEO compensation deviates the willingness and behaviour to invest in R&D.
Conclusion/Originality
To the best of our knowledge, this study is the first to outline the paradoxical empirical evidence on family firms and R&D investments by analysing control diversity and how the moderating role of CEO compensation nexus can alter willingness towards R&D. The study is a novel attempt following De Massis et al's framework to test the willingness and ability of LCFFs and MCFFs. Previous studies based on agency theory have tacitly assumed that ability and willingness exist in family-controlled firms. However, this study challenges this implicit assumption.
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