Pitting the theoretical assumptions of agency theory against the characteristic governance mechanisms of a state-coordinated market economy, this study examines the effects of financial structure, ownership formation and ownership identity on corporate R&D investment. Using panel data on 100 large listed Korean firms, the study provides evidence that market-based governance mechanisms facilitate R&D investment. However, the findings also indicate that the idiosyncratic organizational characteristics of a society, such as business-group affiliation and state ownership in Korea, are not active in dividend payout and are positively related to R&D investment. This suggests that strategic management of changes in corporate governance requires contextual understanding of the two contrasting governance rationales.
Bibliographical noteFunding Information:
This work was supported by a Hankuk University of Foreign Studies Research Fund of 2012 and by a National Research Foundation of Korea Grant funded by the Korean Government (NRF-2010-330-B00100). We thank Sanghoon Lee for data collection and inputs on the draft.
All Science Journal Classification (ASJC) codes
- Business and International Management
- Sociology and Political Science
- Political Science and International Relations
- Strategy and Management