Stockholder Control, Uncertainty and the Allocation of Resources to Research and Development

The impact of state shares on corporate innovation strategy and performance in China

“…This can be understood as large shareholders claim the residual rights of the revenue generated from innovations and therefore managers are required by the large shareholders to invest in R&D activities. As Hill and Snell (1989) hypothesize, the larger and more the ownership concentrates, the more the company tends to invest in R&D. In other words, the higher the ownership concentration ratio is, the stronger the company's motivation for innovation (Holderness & Sheehan, 1988;Shleifer & Vishny, 1986;McEachern & Romeo, 1978).…”

Ownership and Diversification: Agency Theory or Stewardship Theory

“…What is rather apparent is the arbitrary manner in which this has been defined and the difficulties this creates for both replicating and extending the line of research. For example, McEachern and Romeo (1978) regard firms where less than 4 per cent of the voting shares are held by a controlling group as 'managerially controlled', whereas, in the classic Berle and Means (1932), up to 20 per cent of the voting shares could be held by a controlling group and yet the firm in question would still be deemed to be under 'management control'. Likewise, to qualify in the 'owner-controlled' group, Berle and Means would need to see almost 100 per cent of the voting capital held by a single controlling group; cf.…”

Alternative sources of technology: An analysis of induced innovations

“…Link (1982) and Link and Long (1981) have used the number of four-digit industries as a measure of diversification in an empirical test of Nelson's hypothesis. This result is not sensitive to whether the firm is diversified within a two-digit SIC industry or across several two-digit industries (McEachern and Romeo, 1978). The mean value of DIV is 8.31 and the range is 1 to 39.…”