Who Takes the Risk in the Boardroom? How Board Age, Board Tenure, and Family Ownership shape Firms’ Innovation Investments in Europe

Abstract

Research and development (R&D) investments are characterised by substantial uncertainty, long development horizons, and a considerable probability of failure. Although boards of directors play a central role in evaluating and approving such investments, limited research has examined whether board characteristics influence firms’ willingness to invest in uncertain longterm R&D activities. This study examines how board age and board tenure relate to firms’ R&D investments and whether these relationships are moderated by family ownership. Drawing on a behavioural perspective on strategic decision-making under uncertainty and Upper Echelons Theory, it was hypothesised that board age would be negatively associated with firms’ R&D intensity, whereas board tenure would be positively associated with R&D intensity. In addition, family ownership was expected to moderate these relationships. To test these hypotheses, OLS regression analysis was conducted on a panel of 1,920 publicly listed European firms over the period 2000 to 2025. The findings indicate that board age is not significantly associated with firms’ R&D intensity, whereas board tenure is positively associated with R&D intensity. In addition, family ownership does not significantly moderate either relationship. These findings suggest that board characteristics differ in their association with firms’ R&D investments. This study contributes to the literature on corporate governance and R&D investment decisions by extending behavioural perspectives on strategic decision-making to the board level and by examining board characteristics and ownership structures jointly. The findings suggest that understanding firms’ willingness to invest in uncertain long-term R&D activities may require looking beyond directors’ demographic age and considering the role of firm-specific board experience.