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R&D investment management and ambidextrous technological innovation: Evidence from Chinese listed firms

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  • Liu, Duan
  • Jiang, Yuntian
  • Zhou, Qianzhen
  • Yao, Shujie

Abstract

Firm-level technological innovation is in part driven by R&D management motivation. This paper studies the effect of Chinese listed firms’ R&D investment management on their ambidextrous technological innovation performance. In the prospective of internal financial constraints and earnings management, three R&D motivations are identified: strategically proactive intervention, resource-constrained passive adjustment, and R&D manipulation for earnings purposes. Based on the Chinese listed firm level data during 2007–2019, this paper analyzes the effects of these three different R&D management motivations on the ambidextrous innovation patent portfolio, cutting-edge innovation possibility and patent diversification. The empirical results reveal that R&D management significantly promotes ambidextrous innovation, particularly exploration innovation. Firms with more internal financial resources are more likely to engage in proactive R&D activities than those with less financial resources who are more likely to place earnings before R&D investment as the top priority. A robustness test that controls for the 2008 financial crisis also verifies our results.

Suggested Citation

  • Liu, Duan & Jiang, Yuntian & Zhou, Qianzhen & Yao, Shujie, 2023. "R&D investment management and ambidextrous technological innovation: Evidence from Chinese listed firms," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 843-860.
    • Handle: RePEc:eee:reveco:v:88:y:2023:i:c:p:843-860
    DOI: 10.1016/j.iref.2023.07.020
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    References listed on IDEAS

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    1. Norman Baker & James Freeland, 1975. "Recent Advances in R&D Benefit Measurement and Project Selection Methods," Management Science, INFORMS, vol. 21(10), pages 1164-1175, June.
    2. Kahn, Kenneth B. & Candi, Marina, 2021. "Investigating the relationship between innovation strategy and performance," Journal of Business Research, Elsevier, vol. 132(C), pages 56-66.
    3. Degryse, Hans & Matthews, Kent & Zhao, Tianshu, 2018. "SMEs and access to bank credit: Evidence on the regional propagation of the financial crisis in the UK," Journal of Financial Stability, Elsevier, vol. 38(C), pages 53-70.
    4. Matthew Yiu & Wai-Yip Alex Ho & Daniel Choi, 2010. "Dynamic correlation analysis of financial contagion in Asian markets in global financial turmoil," Applied Financial Economics, Taylor & Francis Journals, vol. 20(4), pages 345-354.
    5. Mavroudi, Eva & Kesidou, Effie & Pandza, Krsto, 2020. "Shifting back and forth: How does the temporal cycling between exploratory and exploitative R&D influence firm performance?," Journal of Business Research, Elsevier, vol. 110(C), pages 386-396.
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    Cited by:

    1. Zhang, Xiekui & Gong, Dayong & Huang, Yihan & Li, Yiting, 2024. "The Government's fiscal and taxation policy effect on enterprise productivity: Policy choice and optimal allocation," International Review of Economics & Finance, Elsevier, vol. 93(PB), pages 28-41.
    2. Xu, Chuanxin & Jiang, Yingbing, 2024. "Impact of online communication on the ambidextrous innovation investment of enterprises," International Review of Economics & Finance, Elsevier, vol. 94(C).

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    More about this item

    Keywords

    R&D management; Earnings manipulation; Ambidextrous innovation; Patent diversification;
    All these keywords.

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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