This paper primarily questions whether under vulnerability, decision-makers will be able to turn R&D into technological innovation more efficiently in order to increase the likelihood of firm survival (Palmer & Wiseman, 1999), using divergences between current firm performance and both historical and social performance as indicators of aspirations gaps (Lant, 1992; Wiseman & Gómez-Mejia, 1998). Then, we look whether the level family management and the level of slack may moderate the effect of performance below aspiration levels on the relationship between R&D intensity and the likelihood of obtaining technological innovation.Universidad de Málaga. Campus de Excelencia Internacional Andalucía Tec

Diéguez-Soto, Julio

English

Repositorio Institucional Universidad de Málaga

04/07/20171The Conversion Rate of R&D into Technological InnovationinFamily-Managed Firms under VulnerabilityMonserrat Manzaneque-LizanoAlfonso A. Rojo-RamírezJulio Diéguez-SotoMaría José Martínez-RomeroGeneral aims of the studyEFFICIENCY TURNING R&D INTO TIMODERATING ROLE OF SLACK AND FAMILY MANAGEMENTEvaluating whether under vulnerability decision-makers will be able to turn R&D into TI more efficiently Investigating whether thepresence of slack and familymanagement affects to theconversion rate of R&D into TI under vulnerabilityIntroduction Hypotheses Method Findings and  Contributions04/07/20172Our proposel modelR&D Intensity Technological InnovationHistorical/Social Aspiration LevelFinancial SlackFamily ManagementH1 +H3 +H2 +Introduction Hypotheses Method Findings and  ContributionsHypothesis Hypothesis developmentTechnologicalInnovationR&D IntensityHistorical/social aspiration levelsH1. Performance below aspiration levels strengthens the positive effect of R&D intensity on the likelihood of obtaining TI. BAM: Loss aversion and problem framing(Wiseman & Gómez-Mejia, 1998). Firstly lossaverse and only secondly risk averse. Under vulnerability, strategic and tacticalchanges executed to save the firm fromdeteriorated financial conditions (Bromiley,2009). Decision-makers exceptionally talented andreceptive Different coalitions of stakeholders arise (Cyert& March, 1963)H1 +Introduction Hypotheses Method Findings and  Contributions04/07/20173Hypothesis Hypothesis developmentTechnologicalInnovationR&D IntensityHistorical/social aspiration levelsH2. As slack (particularly financial slack) increases, the influence of performance below aspiration levels is more likely to strengthen the positive effect of R&D intensity on the likelihood of obtaining TI.Financial SlackH2 + Slack can be employed for strategicorganizational activities (Parida & Örtqvist,2015). Under vulnerable situations, it givesmanagers flexible resources (Kotlar, DeMassis, et al., 2014) and allows engaging inmore efficient orchestration actions(Sirmon, Hitt, Ireland, & Gilbert, 2011)Introduction Hypotheses Method Findings and  ContributionsHypothesis Hypothesis developmentTechnologicalInnovationR&D IntensityHistorical/social aspiration levelsH3. Family management positively moderates the effect that performance below aspiration levels exerts on the positive relationship between R&D intensity and the likelihood of obtaining TIFamilymanagementH3 + Vulnerability implies more willingness. It ismore likely to achieve a certain critical mass ofR&D to obtain higher productivity growth(Kancs & Siliverstovs, 2012) Also greater ability to pursue innovation as aresult of their tacit knowledge stocks,knowledge combination, their long-termorientation (Patel & Fiet, 2011; Röd, 2016) andparsimony (Carney, 2005) The willingness and the ability to innovate go inthe same direction because socioemotional andfinancial endowment may be lost (Chrisman &Patel, 2012; Gómez-Mejia et al., 2010)Introduction Hypotheses Method Findings and  Contributions04/07/20174DataThe data used come from the Survey on Business Strategies(ESEE). This survey is built on information from Spanishmanufacturing firms.Accounting and innovation data was collected for the years 2001-2013. After removing firms with missing data for the analysedvariables, the final sample consisted of 3,116 observationsIntroduction Hypotheses Method Findings and  ContributionsVariables Technological innovation. Completely new product or make important changes on theirproducts (product innovation) and/or introduction of significant changes in productionand/or distribution process (process innovation). R&D intensity. Total expenditures for R&D divided by total sales Performance below aspiration level based on own prior performance (historicalaspiration) is constructed by comparing the level of the firm aspiration level in period t-1and the aspiration level from the prior period t-2. The second proxy of aspiration level,“social aspiration” is built comparing Firm’s performance in period t-1 with theperformance of a typical firm in the same industry for the same period. Financial Slack. Firm’s current ratio (current assets divided by current liabilities). Family management. Continuous variable counting the number of family membersinvolves into the top management team of the firm.Introduction Hypotheses Method Findings and  Contributions04/07/20175Technological innovation= β1 R&D intensity t-1 +β2 Performance below aspiration level + β31R&D Intensityt-1*Performance below aspiration level +Controls +ƐTechnological innovation= β1 R&D intensity t-1 + β21 Performance below aspiration level + β23 Unabsorbed Slack t-1 + β31 R&D Intensityt-1 * Performance below aspiration level + β34 R&D Intensityt-1* Unabsorbed Slack t-1 + β35 Performance below aspiration level yt-1 * Unabsorbed Slack t-1+ β42 R&D Intensityt-1 *Performance below aspiration level* Unabsorbed Slack t-1 + Controls + Ɛ04/07/20176Technological innovation= β1 R&D intensity t-1 + β21 Performance below aspiration level + β22 Family management t-1 + β31 R&D Intensityt-1 * Performance below aspiration level + β32 R&D Intensityt-1 * Family management t-1 + β33 Performance below aspiration level yt-1 * Family management t-1+ β41 R&D Intensityt-1 * Performance below aspiration level * Family management t-1 + Controls + ƐReferent and historical target-performance gaps matter whenanalysing firms’ conversion rate: risky decisions (Chrisman andPatel, 2012; Gómez-Mejía et al., 2007) and different strategicactions (Holmes et al. 2011).When managers detect deviations of performance outcomesbelow the aspiration level, they become more likely to obtainbetter conversion rates (giving the best, change firm strategic andtactic behaviour, exceptionally talented and receptive,…).Introduction Hypotheses Method Findings and  Contributions04/07/20177Slack helps firms to improve the conversion rate of R&D into TIalso under vulnerability. Managers utilize slack to enlarge exploitation of currentadvantages and to explore new opportunities and new occasionsfor business from internal sources (Kotlar et al., 2014).Unabsorbed slack offers managers potentially utilizable resourcesthat help them to achieve their goals, particularly relevant whenfirms are under their aspiration performance levelsIntroduction Hypotheses Method Findings and  ContributionsVulnerability means for F-MFs a higher willingness to reach acritical mass of R&D, and a greater ability to orchestrate uniqueresources, able to generate better conversion rates. However, thedecisions affecting the process of the conversion are notimmediately effective (Hall & Oriani, 2006).Consistent with economic considerations, family managers try toimprove conversion rate to overcome declining performance, butwhen the preservation of the firm’s discretion and socioemotionalwealth is endangered, they opt for adopting a technologicalstrategy which accepts below target performance.Introduction Hypotheses Method Findings and  Contributions04/07/20178Family managers consider a loss of competitive advantage relativeto industry as the most important reference when actionsregarding the process of achievement of TI from R&D investmentshave to be carried out.Utilizing a continuous measure of the level of family managementallow us to explore heterogeneity across family firms in theirefficiency of converting R&D expenses into TI in a context oflossesFinally, this paper answers the call of Duran, et al. (2015) foradditional research on the conversion rate of innovation inputinto output, by studying this relationship taking into considerationvulnerable situations (Gómez-Mejia et al., 2015).Introduction Hypotheses Method Findings and  ContributionsThanks for your attention!MálagaAlmeríaCastilla.-La Mancha04/07/20179Sample CharacteristicsYear Firms in the population Matched sample2001 3462 3142002 3462 2622003 3462 2322004 3462 2542005 4050 2422006 4357 2322007 4475 2722008 4629 2262009 4851 2162010 5040 2142011 5040 2102012 5304 2202013 5304 222Matched sampleOne firm with TI outputs (157 firms in 2001) with another matched control firm without innovation outputs (157 firms in 2001) in the same year and similar size and industry Sample composition by industryIndustry N %1. Meat industry 130 4.17%2. Foodstuffs and snuff 364 11.68%3. Drinks 98 3.15%4. Textiles and clothing 209 6.71%5. Leather and footwear 57 1.83%6. Timber industry 64 2.05%7. Paper Industry 165 5.30%8. Graphics 99 3.18%9. Chemical and pharmaceutical products 304 9.76%10. Rubber and plastic 222 7.12%11. Non-metallic mineral products 82 2.63%12. Ferrous and nonferrous metals 129 4.14%13. Metal products 427 13.70%14. Agricultural and industrial machinery 184 5.91%15. Computer, electronic and optical products52 1.67%16. Electrical machinery and material 122 3.92%17. Motor vehicles 220 7.06%18. Other transport equipment 83 2.66%19. Furniture industry 83 2.66%20. Other manufacturing 22 0.71%TOTAL 3,116 100.00%04/07/201710Descriptive statisticsContinuous variablesVariables Innovator Firms Non-Innovator FirmMean Median 25% 75% Std.Dev. Mean Median 25% 75%Std. Dev.T-TestsR&D intensity t-11.234 0.294 0.001 1.220 3.572 0.568 0.001 0.001 0.195 2.411 -6.090***Performance below aspiration level (Historical aspirations) t-1  0.037 0.000 0.000 0.036 0.092 0.035 0.000 0.000 0.033 0.091 -0.660Performance below aspiration level (Social aspirations) t-10.047 0.009 0.000 0.067 0.096 0.047 0.011 0.000 0.072 0.082 -0.107Family management t-1 0.672 0.000 0.000 1.000 0.972 0.598 0.000 0.000 1.000 0.951 -2.271**Unabsorbed slack t-12.453 2.056 1.422 2.959 1.768 2.501 1.983 1.382 3.066 1.884 0.729Firm size16.578 1.629 15.091 17.923 1.937 16.403 16.482 14.844 17.889 2.036 -2.572**Firm age3.300 3.367 2.890 3.784 0.765 3.190 3.296 2.708 3.761 0.792 -4.113***Performance over aspiration level (Historical aspirations) t-1  0.046 0.000 0.000 0.042 0.126 0.046 0.000 0.000 0.045 0.123 0.055Performance over aspiration level (Social aspirations) t-1  0.098 0.067 0.031 0.121 0.138 0.096 0.064 0.031 0.119 0.140 -0.293***; **; *; and † Signiﬁcant at the 0.001, 0.01, 0.05 and 0.10 levels, respecRvelyDescriptive statisticsCategorical variablesCategorical variablesInnovator firms Non-innovator firmsN % N %Subsidies 305 19.58% 100 6.42%Non subsidies 1253 80.42% 1458 93.58%Technological opportunity industry 346 22.21% 345 22.14%Non- Technological opportunity industry 1212 77.79% 1213 77.86%Geographical localization Nothwest 258 15.01% 273 15.88%Northeastern 182 10.59% 166 9.66%Madrid 217 12.62% 264 15.36%Center 219 12.74% 235 13.67%East 710 41.30% 597 34.73%South 116 6.75% 146 8.49%Canarias 17 0.99% 38 2.21%04/07/201711Variables 1 2 3 4 5 6 7 8 9 10 11 121. Technological innovation 12. R&D intensity t-1 0.109*** 13. Performance below aspiration level (Historical aspirations) t-1  0.011 -0.023 14.  Performance below aspiration level (Social aspirations) t-1  0.002 0.003 0.385*** 15. Family management t-1 0.039** -0.054** 0.028 -0.030 16. Unabsorbed slack t-1 -0.013 -0.015 -0.014 -0.038** 0.116*** 17. Firm size 0.044** 0.119*** -0.048** -0.045** -0.329*** -0.084*** 18. Subsidies 0.185*** 0.214*** -0.022 -0.008 -0.058*** -0.051*** 0.261*** 19. Technological opportunity 0.001 0.184*** 0.011 0.005 -0.147*** -0.059*** 0.159*** 0.099*** 110. Firm age 0.071*** 0.082*** 0.041** 0.016 0.024 0.066*** 0.318*** 0.099*** 0.03 111. Performance over aspiration level (Historical aspirations) t-1  -0.001 -0.034* 0.258*** 0.461*** 0.039** -0.073*** -0.091*** -0.014 0.014 -0.006 112. Performance over aspiration level (Social aspirations) t-1  0.005 0.009 0.027 0.104*** -0.025 -0.067*** -0.076*** -0.018 0.021 0.001 0.494*** 113. Territorial specificities dummies 0.015 -0.088*** -0.023 -0.047** 0.072*** 0.063*** -0.029* -0.041** -0.121*** 0.079*** -0.023 -0.074******; **; *; and † Signiﬁcant at the 0.001, 0.01, 0.05 and 0.10 levels, respecRvelyMulticollinearity analysis Historical aspirations Social aspirationR2 VIF Condition Index R2 VIFCondition IndexR&D intensity t-1 0.086 1.09 1.000 0.085 1.09 1.000Performance below aspiration level (Historical aspirations) t-1  0.083 1.09 2.179Performance below aspiration level (Social aspirations) t-1  0.025 1.03 2.268Family management t-1 0.145 1.17 2.367 0.149 1.17 2.695Unabsorbed slack t-1 0.038 1.04 2.762 0.036 1.04 2.856Firm size 0.259 1.35 2.865 0.259 1.35 2.948Subsidies 0.100 1.11 3.052 0.100 1.11 3.158Technological opportunity 0.077 1.08 3.300 0.075 1.08 3.413Firm age 0.113 1.13 4.415 0.116 1.13 4.556Performance over aspiration level (Historical aspirations) t-1  0.089 1.10 6.607Performance over aspiration level (Social aspirations) t-1  0.033 1.03 6.841Territorial specificities dummies0.034 1.03 14.703 0.037 1.04 15.06704/07/201712Variables 1 2 3 4 5 6Main effectR&D intensity t-1 (β1) -0.085**(0.035)0.121***(0.040)0.121***(0.040)0.159***(0.040)0.156***(0.039)ModeratorPerformance below aspiration level (Historical aspirations) t-1  (β21a) - -0.259(0.417)-1.138*(0.648)-Performance below aspiration level (Social aspirations) t-1  (β21b) - - --0.028(0.473)-1.152*(0.642)Interaction effectR&D intensity t-1* Performance below aspiration level (Historical aspirations) t-1 (β31a)- - - -1.749**(0.739)-R&D intensity t-1* Performance below aspiration level (Social aspirations) t-1 (β31b)- - - - -1.744**(0.738)ControlsFirm size0.912***(0.103)0.867***(0.136)0.419***(0.145)0.418***(0.146)0.531***(0.163)0.529***(0.163)Subsidies1.417***(0.147)1.354***(0.167)1.330***(0.166)1.329***(0.166)1.393***(0.176)1.396***(0.176)Technological opportunity0.582***(0.195)0.821***(0.226)1.097***(0.236)1.103***(0.235)1.017***(0.253)1.023***(0.253)Firm age0.160***(0.058)0.184***(0.061)0.203***(0.066)0.204***(0.066)0.232***(0.074)0.231***(0.074)Performance over aspiration level (Historical aspirations) t-1  -0.010(0.336)0.086(0.366)Performance over aspiration level (Social aspirations) t-1  0.103(0.289)0.139(0.329)Territorial specificities dummies yes Yes Yes Yes Yes YesNumber of observation 3116 3116 3116 3116 3116 3116Log likelihood -1013.718 -917.463 -842.573 -842.724 -754.831 -754.774Model χ2 354.05*** 361.78*** 273.26*** 273.18*** 295.63*** 295.55Pseudo R2 0.123 0.120 0.106 0.106 0.120 0.120Wald test: Total effects(β1+ β31) 1.908**(β1+ β31) 1.900**Conditional logistic regression. The effects of aspiration levels on the relationship between R&D intensity and the likelihood of innovation output achievement.***; **; *; and † Signiﬁcant at the 0.001, 0.01, 0.05 and 0.10 levels, respecRvelyVariables 1 2 3 4Main effectR&D intensity t-1 (β1)0.121***(0.040)-0.102*(0.055)0.119***(0.040)-0.100**(0.055)ModeratorPerformance below aspiration level (Historical aspirations) t-1  (β21a)0.257(0.419)2.326***(0.796)-Performance below aspiration level (Social aspirations) t-1  (β21b)) --0.037(0.466)2.345***(0.781)Unabsorbed slack t-1 (β22)-0.013(0.022)0.114***(0.038)0.079†(0.047)0.101***(0.038)Interaction effectR&D intensity t-1* Performance below aspiration level (Historical aspirations) t-1 (β31a)3.021***(0.919)-R&D intensity t-1* Performance below aspiration level (Social aspirations) t-1 (β31b) -3.011***(0.916)R&D intensity t-1* Unabsorbed Slack t-1 (β34)0.153***(0.038)0.151***(0.037)Performance below aspiration level (Historical aspirations) t-1* Unabsorbed Slack t-1 (β35a)1.628***(0.568)-Performance below aspiration level (Social aspirations) t-1* Unabsorbed Slack t-1 (β35b) -1.622***(0.567)R&D intensity t-1* Performance below aspiration level (Historical aspirations) t-1 * Unabsorbed Slack t-1 (β42a)1.662***(0.627)R&D intensity t-1* Performance below aspiration level (Social aspirations) t-1 * Unabsorbed Slack t-1 (β42b)1.653***(0.624)ControlsFirm size0.418***(0.146)0.574***(0.158)0.433***(0.146)0.572***(0.158)Subsidies1.329***(0.166)1.308***(0.175)1.324***(0.166)1.311***(0.176)Technological opportunity1.096***(0.236)1.114***(0.246)1.089***(0.236)1.121***(0.246)Firm age0.207***(0.067)0.232***(0.075)0.205***(0.066)0.231***(0.075)Performance over aspiration level (Historical aspirations)t-1  -0.038(0.338)0.108(0.353)Performance over aspiration level (Social aspirations)t-1  0.099(0.289)0.149(0.329)Territorial specificities dummies Yes Yes Yes YesNumber of observation 3116 3116 3116 3116Log likelihood -842.422 -738.344 -841.107 -738.292Model χ2273.60***297.13***279.14***297.51***Pseudo R2 0.106 0.139 0.108 0.140Wald test: Total effects(β1+ β31a) 2.919***(β1+ β31b) 2.911***(β1+ β34) 0.051* 0.051(β1+ β31a+ β34+β42a) 4.734***(β1+ β31b+ β34+β42b) 4.766***Conditional logistic regression. The effects of financial slacks on the moderating role of historical and social aspiration levels on the relationship between R&D intensity and the likelihood of innovation output achievement (Unabsorbed slack).***; **; *; and † Signiﬁcant at the 0.001, 0.01, 0.05 and 0.10 levels, respectively04/07/201713Variables 1 2 3 4Main effectR&D intensity t-1 (β1)0.122***(0.042)0.132***(0.040)0.121***(0.041)0.129***(0.038)ModeratorPerformance below aspiration level (Historical aspirations) t-1  (β21a)0.240(0.413)0.893(0.689)- -Performance below aspiration level (Social aspirations) t-1  (β21b) - -0.273(0.399)0.847(0.656)Family management t-1 (β22)0.102**(0.049)0.182**(0.077)0.103**(0.051)0.212***(0.070)Interaction effectR&D intensity t-1* Performance below aspiration level (Historical aspirations) t-1 (β31a) -1.978**(0.797)- -R&D intensity t-1* Performance below aspiration level (Social aspirations) t-1 (β31b)- - -1.972***(0.751)R&D intensity t-1*Family management t-1 (β32)-0.169**(0.074)-0.235***(0.082)Performance below aspiration level (Historical aspirations) t-1 * Family management t-1(β33a) -0.241(1.267)Performance below aspiration level (Social aspirations) t-1 * Family management t-1 (β33b) - -0.473(0.501)R&D intensity t-1* Performance below aspiration level (Historical aspirations) t-1 * Family management t-1 (β41a)--0.583(1.524)- -R&D intensity t-1* Performance below aspiration level (Social aspirations) t-1 * Family management t-1 (β41b)- - --1.582**(0.706)ControlsFirm size0.567***(0.164)0.539***(0.159)0.565***(0.164)0.539***(0.162)Subsidies1.378***(0.177)1.356***(0.176)1.382***(0.178)1.368***(0.177)Technological opportunity1.035***(0.255)1.009***(0.249)1.042***(0.255)1.015***(0.252)Firm age0.217***(0.073)0.228***(0.074)0.216***(0.073)0.224***(0.074)Performance over aspiration level (Historical aspirations) t-1  0.121(0.342)-0.583(1.524)Performance over aspiration level (Social aspirations) t-1  0.204(0.321)0.189(0.333)Territorial specificities dummies Yes Yes Yes YesNumber of observation 3116 3116 3116 3116Log likelihood -759.748 -745.151 -759.624 -741.588Model χ2297.24***292.68***297.15***292.60***Pseudo R2 0.115 0.132 0.115 0.136Wald test: Total effects(β1+ β31a) 2.110**(β1+ β31b) 2.101**(β1+ β32) 0.301*** 0.364***(β21b+ β33b) 0.602*(β1+ β31a+ β32 +β41a) -0.451Conditional logistic regression. The effects of the level of family management on the moderating role of aspiration levels on the relationship between R&D intensity and the likelihood of innovation output achievement ***; **; *; and † Signiﬁcant at the 0.001, 0.01, 0.05 and 0.10 levels, respectively

The Conversion Rate of R&D into Technological Innovation in Family-Managed Firms Under Vulnerability

Repositorio Institucional de la Universidad de Málaga

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The Conversion Rate of R&D into Technological Innovation in Family-Managed Firms Under Vulnerability

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