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Short-term Perceptions, Corporate Governance and the Management of R & D in Italian Companies

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  • Franco Cescon

Abstract

The aim of this paper was tomeasure the short-term perceptions of FinanceDirectors and how managers react to pressuresfrom the financial and corporate governancesystems in the management of R and Dexpenditure and innovation. The studyreplicates Demirag's U.K. study.Results do not support the proposition that thefinancial and governance systems behave in ashort-term manner in general. The bankingsystem in Italy tends to be neutral as regardsthe firm's decision making and management hasthe freedom to steer the firm forward in aframework of long-term profitability andgrowth. Italian firms are not perceived asbeing possible candidates for take-overoperations, which might exacerbate the problemof pressure to deliver short-term profits atthe expense of long-term R and D investments.However, in some sectors and under certain sizeand ownership structure conditions short-termpressures are felt more strongly: they aremainly science-based sectors as well as sometraditional sectors (engineering and constructions).In higher-pressured firms (HPFs) managementtends to place more emphasis on costs than onproduct innovation and is more likely to view Rand D as an overhead that has to be trimmedduring a recession. Moreover, the controlmechanisms tend toward short-term accountingmeasures. In addition, the prevalent sources ofshort-term pressures – where they are present– are interestingly different in Italy than inthe U.K.: while in the Anglo-Saxon context theyare perceived to come from the market andfinancial institutions, in Italy they areperceived to come from the firm ownersthemselves. Copyright Kluwer Academic Publishers 2002

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  • Franco Cescon, 2002. "Short-term Perceptions, Corporate Governance and the Management of R & D in Italian Companies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 6(3), pages 255-270, September.
    • Handle: RePEc:kap:jmgtgv:v:6:y:2002:i:3:p:255-270
    DOI: 10.1023/A:1019631730439
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    References listed on IDEAS

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    1. Mark Lehrer & Andrew Tylecote & Emmanuelle Conesa, 1999. "Corporate Governance, Innovation Systems and Industrial Performance," Industry and Innovation, Taylor & Francis Journals, vol. 6(1), pages 25-50.
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    4. Franco Cescon, 1998. "Investment Appraisal and Measures of Performance in Italian Divisionalised Companies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 2(2), pages 191-212, June.
    5. Steven N. Kaplan, 1997. "Corporate Governance And Corporate Performance: A Comparison Of Germany, Japan, And The U.S," Journal of Applied Corporate Finance, Morgan Stanley, vol. 9(4), pages 86-93, January.
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    9. Emanuele Bajo & Maroc Bigelli & Sandro Sandri, 1998. "The Stock Market Reaction to Investment Decisions: Evidence from Italy," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 2(1), pages 1-16, March.
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    Cited by:

    1. Sven-Olof Collin, 2007. "Governance strategy: a property right approach turning governance into action," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 11(3), pages 215-237, September.
    2. Cristiana Parisi, 2013. "The impact of organisational alignment on the effectiveness of firms’ sustainability strategic performance measurement systems: an empirical analysis," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(1), pages 71-97, February.
    3. Stéphane Lhuillery, 2006. "The impact of corporate governance practices on R&D efforts: a look at shareholders’ rights, cross-listing and control pyramid," CEMI Working Papers cemi-report-2006-006, Ecole Polytechnique Fédérale de Lausanne, Collège du Management de la Technologie, Management of Technology and Entrepreneurship Institute, Chaire en Economie et Management de l'Innovation, revised Apr 2009.

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