Transactional-institutional fit: Corporate governance of R&D investment in different institutional contexts

Barclay E. James, Jean B. McGuire

Research output: Contribution to journalArticlepeer-review

23 Scopus citations

Abstract

Management research has a rich history devoted to understanding how different types of equity holders facilitate effective governance of investment in research and development (R&D). But scant research exists on understanding how different types of debt effectively govern R&D investment and virtually no research exists on this topic across institutional contexts. Yet, similar types of transactions differ across institutional contexts. This study develops and tests a transactional-institutional fit view of debt governance of R&D investment, grounded in transaction cost economics, which examines the alignment or fit between bank loan debt, bond debt, and R&D investment in bank-based and market-based countries. Analyses of 7943 firms across 12 countries from 1997-2010 support the key proposition: in bank-based (market-based) countries, higher levels of bank loan debt coupled with higher levels of R&D investment increase (decrease) firm performance.

Original languageEnglish
Pages (from-to)3478-3486
Number of pages9
JournalJournal of Business Research
Volume69
Issue number9
DOIs
StatePublished - 1 Sep 2016

Keywords

  • Bank-based system
  • Corporate governance
  • Institutional context
  • Market-based system
  • R&D investment
  • Transaction cost economics

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