Family control, R&D expenses and firm efficiency: evidence from Taiwanese cultural and creative industries

Abstract

PurposeFirst, this study assesses the link between research and development (R&D) expenses and firm efficiency. Second, this study explores how family control moderates the link between the two.Design/methodology/approachThis study uses two measures of time-based firm efficiency, namely, a window slacks-based measure (WSBM) and a window epsilon-based measure (WEBM) of data envelopment analysis (DEA). Then, 216 firm-year observations are analyzed in the Taiwanese cultural and creative industries from 2005 to 2017.FindingsThis study finds that R&D expenses significantly worsen firm efficiency, and that family control positively moderates this effect. A further test separating the sample into family-controlled and nonfamily-controlled firms indicates that R&D expenses negatively affect the efficiency of nonfamily-controlled firms but positively affect that of family-controlled firms.Research limitations/implicationsThe existing literature has examined the link between R&D expenses and corporate performance. However, the process by which R&D expenses affect corporate performance from a production perspective remains unknown.Originality/valueOverall, this study provides insights for policymakers to scrutinize resource management and R&D expenses from the production and resource-based perspectives.