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Firm Characteristics, Uncertainty and Research and Development (R&D) Investment: The Role of Size and Innovation Capacity

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  • Sungmoon Jung

    (Busan Institute of S&T Evaluation and Planning, 79, Centum jungang-ro, Haeundae-gu, Busan 48058, Korea)

  • Gihyun Kwak

    (High-Potential Enterprises Research Institute, 4F, 279, Dongmak-ro, Mapo-Gu, Seoul 04151, Korea)

Abstract

This paper examines the investment behavior of research and development (R&D) under uncertainty. We assume that there is a heterogeneous effect of uncertainty on R&D investment depending on characteristics of a firm. According to the results, the size and the innovation capacity of a firm are found to positively moderate the negative relationship between uncertainty and R&D investment. When the entire sample is divided into large and small-and-medium enterprises and high innovation capacity and low innovation capacity, it is found that the innovation capacity of a firm is a more crucial factor in positively moderating the negative relationship between R&D investment and uncertainty than the size of a firm. These findings provide policy implications, particularly for small-and-medium enterprises (SMEs), to promote R&D activities.

Suggested Citation

  • Sungmoon Jung & Gihyun Kwak, 2018. "Firm Characteristics, Uncertainty and Research and Development (R&D) Investment: The Role of Size and Innovation Capacity," Sustainability, MDPI, vol. 10(5), pages 1-14, May.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:5:p:1668-:d:148224
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