| Author: | Hoskisson, R. Hitt, M. Hill, C. |
| Title: | Managerial incentives and investment in R&D in large multiproduct firms |
| Journal: | Organization Science
1993 : MAY, VOL. 4:2, p. 325-341 |
| Index terms: | COMPENSATION RISK R&D |
| Language: | eng |
| Abstract: | Incentives for division managers in large firms affect their risk orientation and thus their decisions to invest in R&D. This paper reviews theory and hypothesizes that division managers' incentive compensation that is based on financial performance is negatively related to risk taking as measured by R&D intensity. Results of a study of 184 major U.S. firms suggest that incentives based on short-term division financial performance are negatively related to total firm R&D intensity after controlling for industry R&D intensity, firm diversification, size and group structure. |
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