CEO Tenure and R&D Investment: The Moderating Effect of Board Capital

This study examines the curvilinear CEO tenure-R&D investment relationship and the moderating influence of board capital on this relationship, thus making two major contributions. First, the finding of an inverted-U CEO tenure-R&D investment relationship enriches our understanding of how the CEO life cycle affects corporate investment decisions, particularly R&D. Second, the evidence of positive moderating effects of board human and social capital suggests that boards affect managerial choices through their human and social capital, thereby providing insight into how boards influence CEOs' decision-making capabilities and, consequently, their R&D investment decisions. One important implication is that to encourage CEOs to invest in R&D, shareholders in the electronics industry and firms competing in innovation through R&D spending may consider appointing more directors with greater human and social capital to the Board because they will provide CEOs with ongoing advice and essential resources for R&D. The implications for strategy consultants are also discussed.