Principle-agent theory suggests managers might under-invest into R&D for reasons of risk tied to project failure, such … as reduced remuneration and job loss. However, managers might over-invest into innovation for reasons of growth implying … higher remuneration, power and prestige. Using a sample of 1,406 Belgian firms, we find, first, that managers holding no …

Principle-agent theory suggests managers might under-invest into R&D for reasons of risk tied to project failure, such … as reduced remuneration and job loss. However, managers might over-invest into innovation for reasons of growth implying … higher remuneration, power and prestige. Using a sample of 1,406 Belgian firms, we find, first, that managers holding no …

This paper discusses theoretically the different incentives of managers versus firm owners to invest in innovative … managerled firms, expenditures on R&D depend on the control exerted. If capital shares are widely dispersed and managers are thus … only controlled a little by owners, they invest more into R&D. Owner-led firms and managers who are strongly controlled …