What key factors influence a company's spending on research and development? Studies conducted during the past 15 years have focused largely on the nature of particular industries, corporate strategy and the level of ownership by institutional shareholders. However, in “CEO Characteristics and Firm R&D Spending,” a paper published in the June 2002 issue of Management Science, Vincent L. Barker III, an associate professor at the University of Kansas School of Business, and George C. Mueller, adjunct faculty member at the University of Wisconsin-Milwaukee's School of Business Administration, identify another critical contributor. CEO backgrounds — in particular, their academic specialization and areas of management experience — appear to more strongly influence R&D spending than has previously been believed.“CEO characteristics do predict a significant proportion — between 11% and 14% — of the variance in relative R&D spending among the companies we sampled, after controlling for time and ownership attributes,” Barker and Mueller report. In addition, they point out that various CEO characteristics seem to have an equal or greater association with R&D spending than do other purported factors such as diversification strategy.B
