The review of industrial organization vol:24 issue:1 pages:1-24
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 4,126 observations is used to estimate Tobit and semiparametric censored least absolute deviation ( CLAD) models. It turns out that the owner-led firms invest less into R&D than the managerial firms. With respect to the manager-led firms, we have mixed results concerning the question whether expenditures on R&D depend on the control exerted.