Loughborough University

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R&D investments in emerging market firms: the role of institutional investors and board interlocks

journal contribution
posted on 2024-02-09, 14:54 authored by Vidya Sukumara-PanickerVidya Sukumara-Panicker, Saneesh Edacherian, Amon ChizemaAmon Chizema

Despite the increase in institutional investor shareholdings in emerging market firms, their impact on R&D investments has received scant attention in the literature. By integrating agency and resource dependence perspectives, we examine the role of different types of institutional investors and their interactions with board interlocks in shaping their preference for R&D investment in their portfolio firms. We test our hypotheses on a sample of 2478 Indian firm-year observations from 2005 to 2019, using various estimation techniques. Our results indicate that different categories of institutional investors have distinct preferences for R&D investment. Specifically, we find that ownership by both foreign institutional investors and mutual fund investors negatively impacts R&D investments in firms. While board interlocks positively moderate the impact of institutional investors such as banks and financial institutions and foreign institutional investors on R&D investments in firms, this moderation is negative in the case of mutual fund investors and R&D investments in firms. We contribute to the understanding of the determinants of R&D investments in emerging market firms, with a specific focus on institutional investor ownership and add to the nascent literature on the interaction between two forms of governance, i.e., ownership and board characteristics, in shaping this firm strategy.



  • Loughborough Business School

Published in

R&D Management




  • AM (Accepted Manuscript)

Acceptance date







  • en


Dr Vidya Sukumara Panicker. Deposit date: 9 February 2024