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Upper echelons : the reflection of the CEO characteristics on the R&D spending at SMEs

Gils, P.M. van (2022) Upper echelons : the reflection of the CEO characteristics on the R&D spending at SMEs.

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Abstract:In this study, the relationship between CEO characteristics and R&D spending at SMEs is investigated. The importance of innovation has been widely acknowledged by literature. Based upon the Upper Echelon Theory, which argues that the organizational outcomes are partially explained by the values and cognitive bases of their top managers, existing research found significant relationships between CEO characteristics and firm R&D spending. However, there is a clear lack of scientific evidence when specifying SMEs. CEO characteristics are defined by the tenure, age, formal education, and gender of the firm its CEO. The firm’s R&D spending is measured by the R&D spending per employee, the R&D spending to asset ratio, and the R&D spending to revenue ratio. Based on a sample of 162 SMEs located on all continents, a multiple linear regression analysis is conducted. The results show, contrary to previous literature, that there seems to be no significant relationship between CEO characteristics and R&D spending at SMEs. After control variables, the explained variability by the CEO characteristics is not significant in the main model. In the main model, the only CEO characteristic that has a significant positive relationship with R&D spending per employee is the CEO's formal education. Furthermore, different robustness tests are conducted to strengthen the results of the main model. The robustness tests show similar results to the main research model, in which there is only a significant relationship between a CEO's formal education and firm R&D spending. Further research is needed to assess the validity of these results. Nevertheless, this study contributes to the existing literature because of the scarcity of research on CEO characteristics and SMEs.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:83 economics, 85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:https://purl.utwente.nl/essays/90535
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