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In this paper we examine the impact various compensation programs have upon business‐level strategy for technology‐intensive firms. Similarly, we examine the effect of centralization of R&D and non‐R&D decision‐making, formality of procedures, and SBU size on competitive strategy. Analysis of data from 79 SBUs suggest that there is a resource trade‐off between marketing‐oriented strategies and R&D‐oriented strategies, and that managers who operate under certain types of compensation programs will tend to favor R&D/innovation strategies and capital investment over other alternatives. Structure and competitive position also appear to play a significant role in determining technology and investment strategy.
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Galbraith et al. (1991) studied this question.
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