Financial Munificence, R&D Intensity, and New Venture Survival: Critical Roles of CEO Attributes

Abstract

Although financial resources are critical to new ventures, is having more of them always a good thing? Intrigued by industry observations and building on behavioral research into the limitations of munificent resources, we argue that financial munificence can have a negative moderating effect on the impact of R&D investment on venture survival. We further propose that three CEO attributes (i.e., work experience, education, and gender) can mitigate this negative moderating effect. Analyses of a six-year longitudinal dataset of 791 new technology ventures provide strong support for our hypotheses. We contribute to the behavioral research on how resource munificence matters for new ventures by examining the indirect downside of financial munificence and demonstrating how certain CEO attributes can mitigate this effect.