The role of R&D investments in highly R&D-based firms
AbstractPurpose – This paper aims to examine the short-term structure of the impact of R&D investments on turnover growth, indicating differences between tangible and intangible investments. The main questions are whether R&D and capital investments accompany firms' growth in the subsequent periods and how this relationship depends on other characteristics of the firms, such as size and industry. In addition, the authors study the relationship between R&D investments and the autocorrelation dynamics of firm growth. Design/methodology/approach – The paper uses the European Industrial R&D Investment Scoreboard as data source. This data source includes 1,000 European companies with information on employees, turnover, sector affiliation and details on capital expenditure and R&D expenditure. Findings – The authors find that R&D activities have, on average, a positive effect on turnover growth, while capital investments show both, positive and negative, relationships with firm growth. The relationship and its temporal structure strongly depend on firm size and industry affiliation as well as whether investments are considered as one-time or permanent activities. Originality/value – Usually, the impacts of firm characteristics on firm growth are studied without explicitly considering time. Firm characteristics and firm growth are usually measured and examined at the same point in time. In contrast, the study will focus on the short-term structure of the influence of firm characteristics on turnover growth, especially the impact of R&D investments.
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Bibliographic InfoArticle provided by Emerald Group Publishing in its journal Studies in Economics and Finance.
Volume (Year): 31 (2014)
Issue (Month): 1 (February)
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Web page: http://www.emeraldinsight.com
Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
Find related papers by JEL classification:
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
- M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
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