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Performance Shortfall, Top Management Team Faultlines, and R&D Investment: Evidence from China

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  • Yirong Gao
  • Xiaoxi Wei
  • Feng Zhang
  • Dongfeng Yi

Abstract

With the increasing uncertainty of the world economic situation, enterprises are facing the pressure of downward performance, and R&D has been an important strategic choice to solve the performance fall problem of high-tech enterprises. The article tries to explore the changes in the R&D investment intensity of enterprises under different performance lag levels and investigate the influence of the combination of characteristics of top management team(TMT) members on the strategic decision-making process. It is found that the relationship between the degree of performance disparity and R&D investment intensity is inverted U-shaped; the strength of the fracture faultline of the top management team negatively regulates the relationship between the degree of performance disparity and R&D investment and makes the inverted U-shaped curve flat. A further study of specific characteristic fracture bands revealed that team fracture bands based on tenure characteristics had a significant negative moderating effect, while professional and functional background fracture bands had a significant positive moderating effect. This study not only theoretically expands the understanding of the performance shortall and TMT disconnection on the deep-seated motivation of enterprise R&D investment, but also provides practical references for solving the problem of performance gap, optimizing the allocation of TMT human resources, and rationally promoting enterprise R&D investment to achieve transformation.

Suggested Citation

  • Yirong Gao & Xiaoxi Wei & Feng Zhang & Dongfeng Yi, 2024. "Performance Shortfall, Top Management Team Faultlines, and R&D Investment: Evidence from China," International Journal of Business and Management, Canadian Center of Science and Education, vol. 19(6), pages 273-273, December.
    • Handle: RePEc:ibn:ijbmjn:v:19:y:2024:i:6:p:273
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    References listed on IDEAS

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    1. Lv, David Diwei & Chen, Weihong & Zhu, Hang & Lan, Hailin, 2019. "How does inconsistent negative performance feedback affect the R&D investments of firms? A study of publicly listed firms," Journal of Business Research, Elsevier, vol. 102(C), pages 151-162.
    2. Richard F. J. Haans & Constant Pieters & Zi-Lin He, 2016. "Thinking about U: Theorizing and testing U- and inverted U-shaped relationships in strategy research," Strategic Management Journal, Wiley Blackwell, vol. 37(7), pages 1177-1195, July.
    3. Elena Vidal & Will Mitchell, 2015. "Adding by Subtracting: The Relationship Between Performance Feedback and Resource Reconfiguration Through Divestitures," Organization Science, INFORMS, vol. 26(4), pages 1101-1118, August.
    4. John Joseph & Ronald Klingebiel & Alex James Wilson, 2016. "Organizational Structure and Performance Feedback: Centralization, Aspirations, and Termination Decisions," Organization Science, INFORMS, vol. 27(5), pages 1065-1083, October.
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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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