Executive Turnover and Founder CEO Experience: Effect on New Ventures’ R&D Investment

Hyejin Cho, Pyoungsoo Lee and Choong Ho Shin
Additional contact information
Hyejin Cho: Department of International Business, Dongduk Women’s University, Seoul 02748, Korea
Pyoungsoo Lee: Department of Business Administration, Kyonggi University, Suwon 16227, Korea
Choong Ho Shin: Department of IT Management, Kyungmin University, Euijeongbu 11618, Korea

Economies, 2022, vol. 10, issue 5, 1-13

Abstract: As the direction and strategies of new ventures depend on the top management team (TMT)’s stability and continuous efforts, we investigate the relationship between executive turnover and research and development (R&D) investment investment. Furthermore, we assess the moderating role of the founder chief executive officer (CEO)’s prior experiences to show that founders’ experiential knowledge mitigates the adverse side effects of executives’ departure. Our empirical analysis utilizes a large pool of firm-level survey datasets comprising 1897 Korean founder-led ventures. The empirical results show that executive turnover reduces R&D intensity, suggesting that new ventures’ longer-term investments may be affected by the instability of the management team. We also show that the negative effects of executive turnover weaken when the founder CEO has a longer prior work experience, prior business group experience, and founding experience. Our findings show that the founder CEO’s entrepreneurship based on valuable prior experiential knowledge mitigates the negative impact of organizational instability. While the TMT factor is essential for a new venture’s survival, our findings show that the manner in which leaders act should also be considered separately.

Keywords: top management team; executive turnover; founder CEO; managerial experience; new venture; R&D intensity (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.mdpi.com/2227-7099/10/5/97/pdf (application/pdf)
https://www.mdpi.com/2227-7099/10/5/97/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jecomi:v:10:y:2022:i:5:p:97-:d:796944

Access Statistics for this article

Economies is currently edited by Ms. Hongyan Zhang

More articles in Economies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().