Examining the Interactive Endogeneity Relationship between R&D Investment and Financially Sustainable Performance: Comparison from Different Types of Energy Enterprises

Kalon Si, Xin Long Xu and Hsing Hung Chen
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Kalon Si: College of Social Science, Tsinghua University, Beijing 100084, China
Xin Long Xu: College of Tourism, Hunan Normal University, Changsha, Hunan 410081, China
Hsing Hung Chen: School of Business, Macau University of Science and Technology, Taipa, Macau 999078, China

Energies, 2020, vol. 13, issue 9, 1-15

Abstract: This paper employs the cluster analysis to classify the energy sector into three types, namely, technology-, capital-, and labor-intensive energy company. It then studies the interactive endogenous relationship between R&D investment and financially sustainable performance and the moderate effect of the executive incentive through three-stage least squares (3SLS) of the simultaneous equations model (SEM). The results show that for the technology-intensive energy company, an increase in the previous period in R&D investment improves the current period of financially sustainable performance, and the improvement in the current period in financially sustainable performance results in a decline in financially sustainable performance in the next period, which demands an increase in R&D investment subsequently. In contrast, for the capital-intensive energy company, R&D investment can significantly improve the financially sustainable performance in the current period, and the improvement in financially sustainable performance can also promote the intensity of next period R&D investment. For the labor-intensive energy company, R&D investment depends on the company’s previous period returns, while R&D investment has no significant impact on the financially sustainable performance in the current period and the next period. In addition, the salary incentives for executives have a significant positive moderate effect on the relationship between R&D investment and financially sustainable performance, especially in the technology-intensive energy company, while equity incentives for executives do not show any significant effect in the sample for different types of companies.

Keywords: R& D investment; financially sustainable performance; executive incentive; endogenous relationship; energy enterprises (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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