CEO power, innovative investment and family board involvement: An empirical study of Chinese family SMEs

Figures & data

Table 1. CEO power dimension and explanation

Dimensions of CEO power	Interpretation of dummy variables
Ownership power	Whether the CEO owns the equity Yes = 1, No = 0
Expert power	Whether the CEO has a master’s degree or above Yes = 1, No = 0
Prestige power	Whether the CEO has a part-time position outside the firm Yes = 1, No = 0
Structural power	Whether the CEO is also the chairman of the board Yes = 1, No = 0

Table 2. Measurement of variables

Variable type	Variable name	Abbreviations	Measurement
Dependent Variable	Innovative investment	RD	The ratio of R&D spending to the total sales
Independent Variable	CEO power	power	The average of the four dummy variables which represent different dimensions of CEO power
Moderating Variable	Family board involvement	fb	The number of family members in the board divided by total number of board directors
Control Variable	Firm size	size	Natural logarithm of a firm’s total assets
	Firm age	age	The number of the years since the firm’s establishment
	Leverage	lev	The asset-liability ratio
	Sales growth	growth	Current sales minus last year’s sales, then divided by last year’s sales.
	Return on assets	Roa	Net income divided by average assets
	Family CEO	Fm CEO	Whether the CEO is a family member Yes = 1, No = 0
	Year	year	Dummy variable
	Industry	Industry	Dummy variable

Table 3. Descriptive statistics

Variables	N	Mean	SD	Minimum	Maximum
CEO power	1079	0.53	0.16	0.00	1.00
R&D investment	1079	0.52	3.91	0.07	0.26
Family board	1079	0.31	0.16	0.00	0.62
Firm size	1079	22.12	0.85	19.03	25.41
Firm age	1079	15.05	4.60	7.00	31
Leverage	1079	0.29	0.21	0.02	0.97
Growth	1079	0.23	0.33	−0.38	2.9
ROA	1079	0.03	0.04	−0.21	0.25
Family COE	1079	0.61	0.52	0.00	1.00

Table 4. Correlation coefficients

Variable	RD	Power	Fb	Lev	Roa	Age	Size	Growth	FmCEO
1. RD	1.00
2. Power	0.22***	1.00
3. Fb	−0.06**	−0.01*	1.00
4. Lev	0.12***	0.05***	−0.1**	1.00
5. Roa	0.01**	−0.15**	0.07***	−0.3**	1.00
6. Age	0.06***	0.08***	0.05***	0.02***	−0.31*	1.00
7. Size	−0.21**	0.09***	0.20***	0.42***	−0.07	0.04*	1.00
8. Growth	0.24***	0.09***	0.05**	0.33***	0.20**	0.02*	0.02*	1.00
9. FmCEO	0.01***	0.41***	0.49***	0.07***	0.05**	0.23**	0.20**	0.21*	1.00
10. Year	Dummy
11.Industry	Dummy

N = 1079. *,**,*** Significance at 0.10, 0.05 and 0.01, respectively

Table 5. Regression results for the effect of CEO power on R&D investment, and the moderating effect of family board involvement

Variable	Model 1	Model 2	Model 3
Independent variable
Power		0.69***	0.75***
Moderator
Fb			0.67
Interaction term
Power × Fb			−0.15***
Control variable
Lev	−.34***	−.30***	−.28***
Roa	0.02***	0.02***	0.03***
Age	−.01	−.06	−.05
Size	.26***	.19***	.16***
Growth	0.03*	−0.05*	−0.03*
FmCEO	0.04	−0.02	−0.02
Industry	Dummy	Dummy	Dummy
Year	Dummy	Dummy	Dummy
n	1079	1079	1079
R^2	0.185	0.189	0.193
Adj. R^2	0.173	0.179	0.181

N = 1079. *,**,*** Significance at 0.10, 0.05 and 0.01, respectively

Table 6. Regression analysis based on different sources of CEO

Variables	Model 4 Professioanl CEO	Model 5 Family CEO	Model 6 Professioanl CEO	Model 7 Family CEO
Power	0.69***	0.33**	0.67**	0.82***
Fb			−0.21	−0.35*
Power ×Fb			−0.02	−0.07***
Lev	−0.03***	−0.01***	−0.03***	−0.01***
Roa	0.22***	0.32***	0.23***	0.33***
Age	0.06	−0.02	0.06	−0.02
Size	0.19	0.23	0.20	0.25
Growth	−0.43***	−0.49***	−0.46***	−0.49***
Industry	Dummy	Dummy	Dummy	Dummy
Year	Dummy	Dummy	Dummy	Dummy
n	421	658	421	658
R^2	0.22	0.14	0.23	0.14
Adj. R^2	0.21	0.12	0.22	0.12

*,**,*** Significance at 0.10, 0.05 and 0.01, respectively

Figure 1. Research model of this study.