Can digital transformation reduce R&D investment disruption during the top executive transition period?

Xiankun Deng, Qingsong Hou and Jin Shen

Managerial and Decision Economics, 2024, vol. 45, issue 4, 1901-1926

Abstract: This study examines whether digital transformation can reduce research and development (R&D) investment disruption during the top executive transition period. Using panel data of A‐listed firms in China from 2007 to 2021, we find that top executive turnover (TET) generally leads to a remarkable reduction in R&D investment, while digital transformation can significantly mitigate the negative impact of TET on R&D investment. Moreover, the smooth management transition effect of digital transformation is more pronounced for firms with outside succession and high organizational complexity. We further divide R&D investments into exploratory and exploitative R&D investments. Compared to exploitative R&D investment, exploratory R&D investment is more adversely affected by TET, and digital transformation has a positive moderating effect on the relationship between them. Our findings suggest that digital transformation enables companies to maintain continuous R&D investment during the top executive transition by improving communication efficiency and enhancing organizational learning.

Date: 2024
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https://doi.org/10.1002/mde.4104

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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:45:y:2024:i:4:p:1901-1926

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