A Duopolistic Analysis of CEO Competitive Aggressiveness with R&D Investment

• 成果类型: Article
• 署名作者: Gao, Xing; Zhang, Yanfang; Zhong, Boyuan; Wang, Xifan; Wang, Ying
• 署名单位: Southeast University - China; Nanjing University of Finance & Economics; Nanjing University of Posts & Telecommunications
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1177/10591478241238971
• 发表日期: 2024
• 页码: 1083-1098
• 关键词: Competitive aggressiveness; R&D investment; Market competition

摘要

While chief executive officer (CEO) competitive aggressiveness can be frequently observed in competitive industries with heavy R&D (research and development) investment, studies on its impact on R&D strategies and hiring strategies for competing firms are rare. This article builds a Cournot-based game model to examine this issue and obtain many novel findings in a competitive duopolistic market. In particular, compared with two firms hiring noncompetitive CEOs, hiring competitive CEOs may hinder rather than stimulate R&D investment when the aggressiveness of competitive CEOs remains relatively weak. Our analysis reveals that despite conflicting interests, firms may choose to hire competitive CEOs. Specifically, when competitive CEOs' aggressiveness is rather low, both firms hire competitive CEOs to gain an output advantage; otherwise, they hire different types of CEOs to avoid head-to-head competition. A prisoner dilemma occurs when two firms choose competitive CEOs because they would be better off when hiring noncompetitive CEOs. Then, although the presence of competitive CEOs always improves total industry output, bilateral competition brings about the lowest total industry profit because fierce output competition substantially reduces prices. Interestingly, unilateral competition enhances total industry profit when the aggressiveness of competitive CEOs remains rather strong. Finally, this study shows that the endogenous aggressive nature of competitive CEOs does not qualitatively alter these main results.