Showing papers on "R&D intensity published in 1993"
TL;DR: In this paper, a study of 184 major U.S. firms suggests that incentives based on short-term (annual) division financial performance are negatively related to total firm R&D intensity after controlling for industry R&DI intensity, firm diversification, size and group structure.
Abstract: Incentives for division managers in large firms affect their risk orientation and thus their decisions to invest in R&D. This paper reviews theory and hypothesizes that division managers' incentive compensation that is based on financial performance is negatively related to risk taking as measured by R&D intensity. Results of a study of 184 major U.S. firms suggest that incentives based on short-term (annual) division financial performance are negatively related to total firm R&D intensity after controlling for industry R&D intensity, firm diversification, size and group structure. Furthermore, the results suggest that an emphasis on long-term financial incentives may mitigate the negative relationship between these incentives and R&D intensity, but does not promote risk taking. The results suggest the importance of emphasizing strategic controls [evaluating division managers based on operational understanding of strategies proposed (strategic criteria)] as opposed to the use of financial controls [evalua...
337 citations
TL;DR: In this article, the impact of debt on R&D intensity for firms undergoing a leveraged buyout was investigated. And the authors developed seven hypotheses based on capital market imperfection theories and agency theory.
Abstract: This paper deals with the impact of debt on R&D intensity for firms undergoing a leveraged buyout (LBO). We develop seven hypotheses based on capital market imperfection theories and agency theory. To test these hypotheses, we compare 72 R&D performing LBOs with 3329 non-LBO control observations and 126 LBOs with little or no R&D expenditures. The regressions yield four statistically significant major findings. First, pre-LBO R&D intensity is roughly one-half of the overall manufacturing mean and two-thirds of the firm's industry mean. Second, LBOs cause R&D intensity to drop by 40 percent. Third, large firms tend to have smaller LBO-related declines in R&D intensity. Fourth, R&D intensive LBOs outperform both their non-LBO industry peers and other LBOs without R&D expenditures.
231 citations
TL;DR: In this paper, the authors developed and tested a contingency model of firms' adaptation of their R&D intensity in response to organizational decline and found that firms' pre-decline intensity moderates the relationship between severity of decline and degree of cutbacks.