Family control, R&D expenses and firm efficiency: evidence from Taiwanese cultural and creative industries

Abstract

Purpose

First, this study assesses the link between research and development (R&D) expenses and firm efficiency. Second, this study explores how family control moderates the link between the two.

Design/methodology/approach

This study uses two measures of time-based firm efficiency, namely, a window slacks-based measure (WSBM) and a window epsilon-based measure (WEBM) of data envelopment analysis (DEA). Then, 216 firm-year observations are analyzed in the Taiwanese cultural and creative industries from 2005 to 2017.

Findings

This study finds that R&D expenses significantly worsen firm efficiency, and that family control positively moderates this effect. A further test separating the sample into family-controlled and nonfamily-controlled firms indicates that R&D expenses negatively affect the efficiency of nonfamily-controlled firms but positively affect that of family-controlled firms.

Research limitations/implications

The existing literature has examined the link between R&D expenses and corporate performance. However, the process by which R&D expenses affect corporate performance from a production perspective remains unknown.

Originality/value

Overall, this study provides insights for policymakers to scrutinize resource management and R&D expenses from the production and resource-based perspectives.

Citation

Kweh, Q.L., Le, H.T.M., Ting, I.W.K. and Lu, W.-M. (2023), "Family control, R&D expenses and firm efficiency: evidence from Taiwanese cultural and creative industries", International Journal of Emerging Markets, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJOEM-11-2020-1291