Reference no: EM131092410 , Length: word count:5000

Influences of growth potential and business group membership upon the effect of family ownership on R&D investment: Evidence from Thailand

Introduction

Family firms have historically dominated most sectors and industries throughout the world. Though there is no universal definition, family firms generally refer to firms where the major shareholder is a single family and in which the family participates actively in board and/or management roles (Carney et al., 2013). Since they are often tradition-bound, multi-generational, and focused on maintaining control, family firms usually depict little attention to entrepreneurship (Zahra et al., 2004; Gomez-Mejia et al., 2007; Nordqvist and Melin, 2010). In essence, compared to non-family firms, family firms focus tend to be less committed to innovation, research and development (R&D), strategic renewal, organisational rejuvenation, corporate venturing, and other entrepreneurial behaviours. This perhaps explains why family firms generally perform poorer compared to their non-family counterparts (Giovannini, 2010; Ibrahim and Samad, 2011; Adendorff and Halkias, 2014).

Little attention to R&D particularly remains a major weakness as far as family firms are concerned (Peng and Jiang, 2009). This is particularly because the need to maintain control often conflicts with R&D goals (Morck & Yeung, 2003). This view emanates from the family control perspective, which argues that family owners generally depict aversion to activities with uncertain outcomes such as R&D (Gomez-Mejia et al., 2007). Nonetheless, as suggested by the agency theory, family firms' incentives tend to be closely aligned to the firm's long term value despite the fact that managers may be reluctant to invest in long term activities such as R&D (Choi et al., 2015). The implication is that family owned firms is more likely to embrace R&D that would support the achievement of long term goals and objectives (Lee and O'Neill, 2003).

An important goal for any business is to grow. This is particularly because of the significance of growth for firm survival in the long term. In this regard, entrepreneurial activities such as R&D can be instrumental for firm growth as they enable a firm to identify opportunities for growth (Zellweger et al., 2012). Literature demonstrates that industries characterized by abundant growth opportunities facilitate quicker growth for firms, though there may be firm differences in performance and growth (McDougall et al., 1994). For instance, since most family firms pay little attention to R&D, they often do not significantly exploit growth opportunities presented by their industry of operation (McGrath and Nerkar, 2004). Nevertheless, firms that fully exploit growth opportunities register faster growth (Choi et al., 2015). The implication is that the availability of growth opportunities may moderate the relationship between family ownership and R&D investment. In other words, as suggested by Choi et al. (2015), family firms will often invest in R&D if they face the threat of losing growth potential. Nonetheless, there has been little scholarly attention to the role of industry growth opportunities in the family ownership-R&D investment relationship, hence the need for further research.

Firm differences in performance and growth may also be influenced by the extent to which family control is safeguarded (Choi et al., 2015). It is common for family firms to form or belong in groups, which generally denote a set of affiliated firms with a common shareholding and control (Choi et al., 2015). The groups are often intended to protect family control (George and Kabir, 2008; Khanna and Rivkin, 2006). This places the firms in a better position to exploit growth opportunities. Nonetheless, the problem of family control resurfaces. In other words, family control and growth goals may conflict, thereby increasing reluctance to exploit growth opportunities. However, there is need for research to investigate the validity of this claim since little scholarly attention has been paid to the role of business group membership in the family ownership-R&D investment relationship.

Overall, while literature has extensively described the entrepreneurial behaviour of family firms, especially in terms of long term activities such as R&D, little is known about the factors that moderate the behaviour, especially the availability of growth opportunities in the industry of operation as well as business group membership. This is particularly true for firms in Thailand, where family ownership is prevalent. This gap in literature will constitute the focus of the present study. In essence, the aim of the study is to examine role of industry growth opportunities and business group membership on the relationship between family ownership and R&D investment. The research will particularly seek to answer the following questions:

1. What is the relationship between family ownership and R&D investment?

2. Do industry growth opportunities moderate the relationship between family ownership and R&D investment?

3. Does business group membership moderate the relationship between family ownership and R&D investment?

Following from the above questions, the following hypotheses are formulated:

1. The relationship between family ownership and R&D investment is negative.

2. The relationship between family ownership and R&D investment is moderated by industry growth opportunities in a manner that the relationship becomes positive.

3. The relationship between family ownership and R&D investment is moderated by business group membership in a manner that the relationship becomes negative.

We need excellent writing with original references.

Below is the source of the research that I referred to. This one was conducted in Korea. However, my research will conduct in Thailand by selecting the data from the company in Stock Exchange of Thailand focusing on Manufacturing sector.

I am not quite sure with my proposal's quality. But this is the guideline for your work for what I will do. Please ask me if anything you don't understand, so the work will not lose the direction. You may use more references. Furthermore, I am recently studying in UK. I would like the style of reference in Harvard style.

Kindly provide your quotes, we need excellent writing with original references. We are attaching student proposals for your reference. Kind;y let us know any queries.

3000 words- literature review.

2000 words methodology.

Attachment:- Assignment.rar