This paper discusses theoretically the different incentives of managers versus firm owners to invest in innovative activities. There are opposing effects concerning R&D intensity in the manager-controlled firm. Our study on the determinants of R&D intensity presents empirical results concerning this question. A sample of German firms with 3,978 observations is used and it turns out that the owner-led firms invest less into R&D than the managerial firms. With respect to the 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 have a very similar R&D intensity.
Innovative Activity Managerial versus Owner-led Firms Incentives Tobit Regression