What’s inside the Mind of a CEO? The Effects of Discretionary Slack Resources on R&D Investment

Seunghye Lee; Won Yong Oh; Young Kyun Chang

doi:10.3390/bs13030247

What’s inside the Mind of a CEO? The Effects of Discretionary Slack Resources on R&D Investment

Seunghye Lee, Won Yong Oh, Young Kyun Chang

Research output: Contribution to journal › Article › peer-review

1 Scopus citations

Abstract

This study investigates the effects of discretionary slack resources on a firm’s R&D investment. Specifically, we examine whether and how a CEO’s psychological traits play a role in the relationship between discretionary slack and R&D investment. Using a panel sample from U.S. manufacturing firms in 2006–2010, we found that slack resources lead to an increase in R&D intensity. Furthermore, this positive effect is stronger when CEOs have a strong promotion focus and perceive an addressable negative attainment discrepancy. Thus, our findings show how (a) the level of discretionary slack and (b) CEOs’ promotion focus and aspiration level jointly shape R&D investment decisions. Considering CEOs’ psychological traits contributes to a more comprehensive view of the conditions under which discretionary slack resources matter for a firm’s strategic decisions.

Original language	English
Article number	247
Journal	Behavioral Sciences
Volume	13
Issue number	3
DOIs	https://doi.org/10.3390/bs13030247
State	Published - Mar 2023

Keywords

CEO
R&D investment
aspiration level
future focus
promotion focus
slack resources

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.3390/bs13030247

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title = "What{\textquoteright}s inside the Mind of a CEO? The Effects of Discretionary Slack Resources on R\&D Investment",

abstract = "This study investigates the effects of discretionary slack resources on a firm{\textquoteright}s R\&D investment. Specifically, we examine whether and how a CEO{\textquoteright}s psychological traits play a role in the relationship between discretionary slack and R\&D investment. Using a panel sample from U.S. manufacturing firms in 2006–2010, we found that slack resources lead to an increase in R\&D intensity. Furthermore, this positive effect is stronger when CEOs have a strong promotion focus and perceive an addressable negative attainment discrepancy. Thus, our findings show how (a) the level of discretionary slack and (b) CEOs{\textquoteright} promotion focus and aspiration level jointly shape R\&D investment decisions. Considering CEOs{\textquoteright} psychological traits contributes to a more comprehensive view of the conditions under which discretionary slack resources matter for a firm{\textquoteright}s strategic decisions.",

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doi = "10.3390/bs13030247",

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volume = "13",

journal = "Behavioral Sciences",

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Y1 - 2023/3

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AB - This study investigates the effects of discretionary slack resources on a firm’s R&D investment. Specifically, we examine whether and how a CEO’s psychological traits play a role in the relationship between discretionary slack and R&D investment. Using a panel sample from U.S. manufacturing firms in 2006–2010, we found that slack resources lead to an increase in R&D intensity. Furthermore, this positive effect is stronger when CEOs have a strong promotion focus and perceive an addressable negative attainment discrepancy. Thus, our findings show how (a) the level of discretionary slack and (b) CEOs’ promotion focus and aspiration level jointly shape R&D investment decisions. Considering CEOs’ psychological traits contributes to a more comprehensive view of the conditions under which discretionary slack resources matter for a firm’s strategic decisions.

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KW - aspiration level

KW - future focus

KW - promotion focus

KW - slack resources

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What’s inside the Mind of a CEO? The Effects of Discretionary Slack Resources on R&D Investment

Abstract

Keywords

UN SDGs

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