Innovation intensity of military-connected firms

Iman Harymawan, Fajar Kristanto Gautama Putra, Amalia Rizki and Mohammad Nasih

International Journal of Managerial Finance, 2021, vol. 18, issue 2, 365-397

Abstract: Purpose - The study aims to examine the military-connected firms' risk preference, specifically in the innovation intensity level context. The authors argue that firms with military-experienced top management have conservative and risk-averse behavior, influencing the innovation investment policy. Design/methodology/approach - The authors use nonfinancial Indonesian-listed firms from 2010 to 2018 amounted to 2,504 firm-year observations. Findings - The authors document a negative relationship between military connection with both innovation activities and outputs. The additional analysis documents that risk-preferences of military-connected firms will be drastically changed when the industry has a high digital level, which confirms that risk-averse military-experienced management is less dominant with adaptation skill. The authors also identify that veterans did not need a long tenure to influence firms' innovation investment policy. Lastly, the result is robust due to various endogeneity tests employed. Originality/value - This study further examines military-connected firms' technological innovation compared to prior studies and enriches the related literature.

Keywords: Military connection; Innovation intensity; Research and development; Intangibles (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijmfpp:ijmf-12-2020-0616

DOI: 10.1108/IJMF-12-2020-0616

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