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MDPI, Sustainability, 22(11), p. 6524, 2019

DOI: 10.3390/su11226524

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Postgraduate Education of Board Members and R&D Investment—Evidence from China

Journal article published in 2019 by Chuanyi Wang, Jiale Yang ORCID, Zhe Cheng, Chaoqun Ni ORCID
This paper is made freely available by the publisher.
This paper is made freely available by the publisher.

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Abstract

Increasing research and development (R&D) investment has been a common strategy to advance the sustainable development of economy and competitiveness across the world. Instead of external determinants, exploring the influence of internal factors such as the characteristics of board members is an important topic, yet under-researched. This article aims to reveal whether a firm’s R&D investment is related to the directors’ postgraduate education experience. Further, we want to explore whether this relationship shows heterogeneity in different industrial environments. We analyzed information from a sample of 1374 listed companies in China using descriptive statistics, ordinary least square (OLS) regression and instrumental variable (IV) estimation, and came to the following conclusions: First, the percentage of directors with doctorates significantly increases the chance of investing R&D activities. Second, in the second industry, the higher the proportion of postgraduate education degree holder as directors in a firm, the more expenditure the firm invests in R&D activities. Yet, there is no such association in the third industry. Finally, if a capital-driven strategy is adopted, directors with a master’s degree tend to reduce R&D investment in IT companies. Findings from this research not only enrich innovation management theory, upper echelon theory, and human capital theory, but also provide insights for corporate governance and national sustainable innovation.