Publication Type
Journal Article
Version
publishedVersion
Publication Date
4-2017
Abstract
A firm's strategic investments in knowledge-based assets through research and development (R&D) can generate economic rents for the firm, and thus are expected to affect positively a firm's financial performance. However, weak protection of minority shareholders, weak property rights, and ineffective law enforcement can allow those rents to be appropriated disproportionately by a firm's powerful insiders such as large owners and top managers. Recent data on Chinese publicly listed firms during 2007-2012 were used to demonstrate that the expected positive relationship between knowledge assets and performance is weaker in transition economies when a firm's ownership is highly concentrated and its managers have wide discretion. Moreover, rent appropriation by insiders was shown to vary with the levels of institutional development in which a firm operates.
Keywords
research and development, rent appropriation, principal-principal conflict, managerial discretion, transition economies, China
Discipline
Asian Studies | Organizational Behavior and Theory | Strategic Management Policy
Research Areas
Strategy and Organisation
Publication
Strategic Management Journal
Volume
38
Issue
4
First Page
813
Last Page
991
ISSN
0143-2095
Identifier
10.1002/smj.2522
Publisher
Wiley
Citation
QIAN, Cuili; WANG, Heli; GENG, Xuesong; and YU, Yangxin.
Rent appropriation of knowledge-based assets and firm performance when institutions are weak: A study of Chinese publicly listed firms. (2017). Strategic Management Journal. 38, (4), 813-991.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/4940
Copyright Owner and License
Publisher
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1002/smj.2522
Included in
Asian Studies Commons, Organizational Behavior and Theory Commons, Strategic Management Policy Commons