DYNAMIC MANAGERIAL CAPABILITIES AND R&D SPENDING: THE ROLE OF CEO FOUNDER STATUS
Abstract
Today’s hypercompetitive economy challenges chief executive officers (CEOs) to make complex yet integral investments in research and development (R&D). Although research has widely discussed R&D spending due to its implications for competitive advantage, it omits whether and how managers’ dynamic capabilities materialise in these long-term investment decisions. This study builds on dynamic managerial capability (DMC) theory to argue that strong managerial-level dynamic capabilities increase R&D spending by improving the capacities of CEOs to sense opportunities and threats, seize them, and reconfigure organisational resources. CEO founder status is additionally proposed as a moderator of this relationship, as founder CEOs differ from professional CEOs in their investment behaviour. The results reveal that DMCs only compositely contribute to R&D investments, while the DMC subcomponents–except for managerial social capital—exert no isolated effects. This study also finds that founder CEOs realise higher R&D investments through their DMCs than their professional counterparts.
