CEO innovation orientation and R&D intensity in small and medium-sized firms: the moderating role of firm growth

Kraiczy, Nils ; Hack, Andreas ; Kellermanns, Franz

In: Journal of Business Economics, 2015, vol. 85, no. 8, p. 851-872

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    Summary
    Although upper echelon literature has found evidence for the effect of executives' characteristics on firm strategy such as the level of research and development (R&D) intensity, research on how different behaviors, values, personalities, motivations, and experiences of executivesinfluence the R&D intensity of small and medium-sized firms is scarce. Applying upper echelon theory, this study uses firm growth (sales and employee growth) as a contingency factor to analyze variations in the effect of chief executive officer (CEO) innovation orientation on R&D intensity in small and medium-sized firms. As research on the direct effect of firm growth on R&D intensity is inconclusive, this study applies firm growth as an indirect effect to show whether the impact of CEO innovation orientation on R&D intensity differs in times of low growth compared to times of high growth in small and medium-sized firms. Using a sample of 77 German CEOs of small and medium-sized firms operating in manufacturing industries, results show that CEO innovation orientation has a positive effect on R&D intensity, and firm growth affects this relationship. Specifically, high CEO innovation orientation has a positive effect on R&D intensity in firms with low growth, while its impact disappears in firms that experience strong growth. Implications and future research are discussed.