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Transactional-institutional fit: Corporate governance of R&D investment in different institutional contexts

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  • James, Barclay E.
  • McGuire, Jean B.

Abstract

Management research has a rich history devoted to understanding how different types of equity holders facilitate effective governance of investment in research and development (R&D). But scant research exists on understanding how different types of debt effectively govern R&D investment and virtually no research exists on this topic across institutional contexts. Yet, similar types of transactions differ across institutional contexts. This study develops and tests a transactional-institutional fit view of debt governance of R&D investment, grounded in transaction cost economics, which examines the alignment or fit between bank loan debt, bond debt, and R&D investment in bank-based and market-based countries. Analyses of 7943 firms across 12 countries from 1997–2010 support the key proposition: in bank-based (market-based) countries, higher levels of bank loan debt coupled with higher levels of R&D investment increase (decrease) firm performance.

Suggested Citation

  • James, Barclay E. & McGuire, Jean B., 2016. "Transactional-institutional fit: Corporate governance of R&D investment in different institutional contexts," Journal of Business Research, Elsevier, vol. 69(9), pages 3478-3486.
    • Handle: RePEc:eee:jbrese:v:69:y:2016:i:9:p:3478-3486
    DOI: 10.1016/j.jbusres.2016.01.038
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