A mediation analysis: Board of directors’ composition, R&D investment, and international firm performance

Download This Article

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

The comprehension and the explanation of the research and development (R&D) investment behaviour are done within the framework of a reflection on corporate governance. This investment does not contribute to creating value only if it is framed by governance mechanisms which role is to keep organizational, agency, or transaction costs as low as possible. In this context, we try to determine whether an integrating model exists; one that measures the simultaneous effect of the characteristics of the board of directors on R&D and the firm performance in an international context. Our model seeks to identify whether the dominance of inside directors and the dual structure influence the level of R&D investment, the mediating variable, and hence the firm performance. Our empirical study was carried out on a total sample of 509 firms divided between 165 American firms, 173 Japanese firms, and 171 French firms over the period 2014 to 2019. The findings of the mediation analysis according to the approach of Preacher and Hayes (2004, 2008) show the significant role of mediation by R&D investment between, on the one hand, the dominance of inside directors and duality, and on the other hand, the firm performance. Differences in the configuration of board of directors (BD) in different countries thus lead to different attitudes to the fulfillment of the control task and the R&D investment decision, value creator.

Keywords: Inside Director, Dual Structure, R&D, Performance

Authors’ individual contribution: Conceptualization – R.Z.-H. and G.Z.; Methodology – R.Z.-H. and G.Z.; Investigation – R.Z.-H.; Resources – R.Z.-H.; Writing – Original Draft – R.Z.-H. and G.Z.; Writing – Review & Editing – G.Z.; Data Curation – G.Z.; Visualization – R.Z.-H. and G.Z.; Supervision – R.Z.-H. and G.Z.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G30, O32

Received: 24.01.2021
Accepted: 23.03.2021
Published online: 24.03.2021

How to cite this paper: Zouari-Hadiji, R., & Zouari, G. (2021). A mediation analysis: Board of directors’ composition, R&D investment, and international firm performance. Corporate Ownership & Control, 18(3), 104-119. https://doi.org/10.22495/cocv18i3art9