Financial constraints and R & D investment: The moderating role of CEO characteristics

Ximing Yin*, Ben Lu Hai, Jin Chen

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

24 Citations (Scopus)

Abstract

How CEOs with different characteristics act differently on R & D investment under the condition of financial constraints is an important but understudied question towards firms' sustainable innovation. Employing the dataset from China-Enterprise Survey 2012 of the World Bank, this study tests the impact of financial constraints on firms' R & D investment and the moderating role of CEO characteristics. Empirical results show that: (1) firm's financial constraints have a significant restricting effect on their R & D investment; (2) internal financial constraints have no significant restricting effect on R & D investment for firms with female CEOs in comparison with firms with male CEOs, while the external financial constraints have a significant restricting effect on R & D investment for both groups. (3) CEO experience has a non-linear moderating effect on the relationship between financial constraints and a firm's R & D investment. When the accumulated experience is overloaded, the positive moderating effect of CEO experience begins to decline and even become negative. Robustness tests further confirm these empirical findings. This study directly contributes to the literature of financing innovation and top management team's impact on firms' sustainable innovation, and generates insights on firms' R & D management under the condition of financial constraints.

Original languageEnglish
Article number4153
JournalSustainability (Switzerland)
Volume11
Issue number15
DOIs
Publication statusPublished - 1 Aug 2019
Externally publishedYes

Keywords

  • CEO characteristics
  • Financial constraints
  • Moderating effect
  • R & D investment
  • Sustainable innovation

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Yin, X., Hai, B. L., & Chen, J. (2019). Financial constraints and R & D investment: The moderating role of CEO characteristics. Sustainability (Switzerland), 11(15), Article 4153. https://doi.org/10.3390/su11154153