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The Impact of Board Characteristics on R&D Investments: The Role of Education Level and Age

In: Sustainable Development in Banking and Finance

Author

Listed:
  • Sedat Çerez

    (Gebze Technical University, Faculty of Business Administration)

  • Abdullah Kürşat Merter

    (Gebze Technical University, Faculty of Business Administration)

  • Yavuz Selim Balcıoğlu

    (Gebze Technical University, Faculty of Business Administration)

  • Gökhan Özer

    (Gebze Technical University, Faculty of Business Administration
    Kyrgyz-Turkish Manas University, Faculty of Economics and Administrative Sciences)

Abstract

In the current dynamic competitive landscape, R&D investments emerge as essential drivers for innovation and sustained growth, offering firms a distinctive competitive edge. This research delves into the determinants of these pivotal investments, emphasizing the influential role of a firm’s board in shaping its strategic direction and resource allocation. Recognized as the strategic helm of an organization, the board’s composition, expertise, and perspective can significantly influence a firm’s direction, particularly in areas as critical as R&D investments. To this end, the study takes into consideration two primary characteristics of the board: their educational background and their age. These attributes are pivotal as they often reflect the board’s collective experience, risk appetite, knowledge base, and foresight—all of which can directly or indirectly shape the firm’s R&D priorities. R&D investments of firms are measured by two different variables, namely, R&D expenditure ratio (R&D1) and R&D investment ratio (R&D2). In the study where the panel data analysis method is applied, it is determined that the average education status of the board of directors at the graduate level has a positive effect on the R&D investments of the firm. In addition, it is also observed that the fact that the board members consist of young members has a positive effect on R&D investments. Furthermore, an interaction effect between education level and age concerning R&D investments has been documented. The study offers insights into how board structures can shape firms to increase their investment in R&D.

Suggested Citation

  • Sedat Çerez & Abdullah Kürşat Merter & Yavuz Selim Balcıoğlu & Gökhan Özer, 2024. "The Impact of Board Characteristics on R&D Investments: The Role of Education Level and Age," Springer Proceedings in Business and Economics, in: Nesrin Ozatac & Nigar Taspinar & Bezhan Rustamov (ed.), Sustainable Development in Banking and Finance, pages 199-212, Springer.
    • Handle: RePEc:spr:prbchp:978-3-031-65533-3_12
    DOI: 10.1007/978-3-031-65533-3_12
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