Ownership concentration, managerial compensation and technology innovation choices

Abstract

Abstract: We analyze the impacts of ownership concentration on technological innovation based on the agency theory and innovation theories. By introducing managerial compensation as mediate variable, we construct the logical relationship of "ownership concentration-managerial compensation-technological innovation" . After testing our hypotheses utilizing data of 182 companies from Chinese manufacture and high-technology industries with EFA,CFA an SEM analyses,we find that managerial compensation mediate the relationship between ownership concentration and technological innovation;and ownership concentration is negativity related to managerial short-term compensation, but is positively related to managerial long-term compensation. Moreover, short-term compensation goes against radical innovation, but long-term compensation promotes both radical and incremental innovation.

Key words: ownership concentration, radical innovation, incremental innovation, managerial compensation

CLC Number:

F273.1

Yang Huijun, Yang Jianjun. Ownership concentration, managerial compensation and technology innovation choices[J]. Science Research Management, 2015, 36(4): 48-55.

References

[1] Holderness C G and Sheehan D P.The role of majority shareholders in publicly held corporations:An exploratory analysis [J].Journal of Financial Economics,1988,20:317-346. [2] Snell S A,Hill C W L.Effects of owenership structure and control on corporate productivity [J],The Academy of Management Journal,1989,32(1):25-46. [3] Graves S B.Institutional ownership and corporate R&D in the computer industry [J].Academy of Management Journal,1988,31(2):417–427. [4] Lee P M and O'Neill H M.Ownership structures and R&D investments of U.S.and Japanese firms:Agency and stewardship perspectives [J].Academy of Management Journal,2003,46(2):212–225. [5] 冯根福,温军.中国上市公司治理与企业技术创新关系的实证分析[J].中国工业经济,2008(7):91-101.Feng Genfu,Wen Jun.An empirical study on relationship between corporate governance and technical innovation of Chinese listed companies [J].China Industrial Economics,2008(7):91-101. [6] Barker V L,Mueller G C.CEO characteristics and firm R&D spending [J].Management Science,2002,48 (6):782-801. [7] Makri M,Lane P J and Gomez-Mejia L R.CEO Incentives,innovation,and performance in technology-Intensive firms:A reconciliation of outcome and behavior-based incentive schemes [J].Strategic Management Journal,2006,27 (11):1057–1080. [8] Atuahene-Gima K.Resolving the gapability-rigidity paradox in new product innovation [J].Journal of Marketing,2005,69:61-83. [9] Gatignon H,Tushman M L,Smith W and Anderson P.A structural approach to assessing innovation:Construct development of innovation locus,type,and characteristics [J].Management Science,2002,48:1103-1122. [10] Henderson R M and Clark K B.Architectural innovation:The reconfiguration of existing product technologies and the failure of established firms [J].Administrative Science Quarterly,1990,(35):9-30. [11] Hoonsopon D and Ruenrom G P.The empirical study of the impact of product innovation factors on the performance of new products:Radical and incremental product innovation [J].The Business Review,2009,12:155-162. [12] Tellis G J,Prabhu J C and Chandy R K.Radical innovation across nations:The pre-eminence of corporate culture [J],Journal of Marketing,2009,73:3-23. [13] Garcia R and Calantone R.A critical look at the technological innovation typology and innovativeness terminology:A literature review [J],Journal of Product Innovation Management,2002,19:110-132. [14] Sorescu A B and Spanjol J.Innovation's effect on firm value and risk:Insights from consumer packaged goods [J].Journal of Marketing,2008,72:114-132. [15] Yanfeng Xue.Make or buy new technology:The role of CEO compensation contract in a firm's route to innovation [J].Review of Accounting Studies,2007,12 (4):659-690. [16] Su Y,Xu D,and Phan P H.Principal–principal conflict in the governance of the Chinese public corporation [J].Management and Organization Review,2008,4(1):17–38. [17] Baysinger B D,Kosnik R D,and Turk T A.Effects of board and ownership structure on corporate strategy [J].Academy of Management Journal,1991,34(1):205–214. [18] 赵文红,李垣.企业家导向与创新选择:企业能力的中介作用[J].科学学研究,2008,26(2):401-408.Zhao Wenhong,Li Yuan.Chinese firm' s influential factors in search tactics for externa l knowledge sources [J].Studies in Science of Science,2008,26(2):401-408. [19] Leifer R,McDermott C M,Colarelli-O'Connor G,Peters L S,Rice M and Veryzer R W.Radical innovation [M].Harvard Business School Press,Boston,2000. [20] Westphal J D and Zajac E J.Substance and symbolism in CEOs' long-term incentive plans [J].Administrative Science Quarterly,1994,39(3):367-390. [21] Wu J,Tu R.CEO stock option pay and R&D spending:A behavioral agency explanation[J].Journal of Business Research,2007,60(5):482-492. [22] Balkin D B,Markm G D and Gomez-Mejia L R.Is CEO pay in high-technology firms related to innovation [J].The Academy of Management Journal,2000,43 (6):1118-1129. [23] Zahra S A,Neubaum D O and Huse M.Entrepreneurship in medium-size companies:Exploring the effects of ownership and governance systems [J].Journal of Management 2000,26 (5):947-976. [24] Milkovich G T,Gerhart B,and Hannon J.The effects of research and development intensity on managerial compensation in large organizations [J].Journal of High Technology Management Research,1991,2(1):133-150. [25] Tan J.Innovation and risk-taking in a transitional economy:A comparative study of chinese managers and entrepreneurs [J].Journal of Business Venturing,2001,16(4):359-376. [26] Hoskisson R E,Hitt M A,and Hill C W L.Managerial incentives and investment in R&D in large multiproduct firms [J].Organization Science,1993,4(2):325-341. [27] Haugen R A and Senbet L W.Resolving the agency problems of external capital through options [J].The Journal of Finance,1981,36(3):629-647. [28] Sanyal P and Bulan L.Innovation,R&D and managerial compensation [R].Working Paper,Brandeis University,2010:1-53. [29] Jensen M C and Ruback P S.The market for corporate control:The scientific evidence [J].Journal of Financial Economics,1983,11:5-50. [30] 魏泽龙,王龙伟,李垣.治理机制、组织学习与创新的关系研究[J].科学学与科学技术管理,2008,29(9):66-69.Wei Zelong,Wang Longwei,Li Yuan.Research on the relationship between corporate governance mechanisms,organizational learning and innovation [J].Science of Science and Management of S.&T.2008,29(9):66-69. [31] 李宁琪,李树.论现代职业经理人激励机制的构建[J].科学与管理,2010,30(4):14-18.Li Ningqi,Li Shu.On constructing the incentive mechanism of modem professional managers [J].Science and Management,2010,30(4):14-18. [32] Gedajlovic E R,and Shapiro D M.Management and ownership effects:Evidence from five countries[J].Strategic Management Journal,1998,19(6):533–553. [33] Munson F C,Pelz D C.The innovation process:A conceptual framework [M].Working paper,University of Michigan,1979. [34] Markman G D,Balkin D B.Governing the innovation process in entrepreneurial firms [J].The Journal of High Technology Management Research.2001,12(2):273-293. [35] Hosono T and Tomiyama M.Corporate governance and research and development:Evidence from Japan[J] Economics of Innovation and New Technology.2004,13(2):141-164 [36] 于慧越.制造业上市公司股权结构对企业创新影响研究[D].天津财经大学,2008.Yu Yuehui.Research on the affect of manufacturing listed-company's ownership structure on technological innovation [D].Tianjin University of Finance and Economies,2008.