IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v9y2017i11p1964-d116709.html
   My bibliography  Save this article

Exploring R&D Influences on Financial Performance for Business Sustainability Considering Dual Profitability Objectives

Author

Listed:
  • Kao-Yi Shen

    (Department of Banking & Finance, Chinese Culture University (SCE), Taipei 11114, Taiwan)

  • Min-Ren Yan

    (Institute of International Business Admin., Chinese Culture University (SCE), Taipei 11114, Taiwan)

  • Gwo-Hshiung Tzeng

    (Graduate Institute of Urban Planning, National Taipei University, New Taipei City 23741, Taiwan)

Abstract

The importance of research and development (R&D) for business sustainability have gained increasing interests, especially in the high-tech sector. However, the efforts of R&D might cause complex and mixed impacts on the financial results considering the associated expenses. Thus, this study aims to examine how R&D efforts may influence business to improve its financial performance considering the dual objectives: the gross and the net profitability. This research integrates a rough-set-based soft computing technique and multiple criteria decision-making (MCDM) methods to explore this complex and yet valuable issue. A group of public listed companies from Taiwan, all in the semiconductor sector, is analyzed as a case study. More than 30 variables are considered, and the adopted soft computing technique retrieves 14 core attributes—for the dual profitability objectives—to form the evaluation model. The importance of R&D for pursuing superior financial prospects is confirmed, and the empirical case demonstrates how to guide an individual company to plan for improvements to achieve its long-term sustainability by this hybrid approach.

Suggested Citation

  • Kao-Yi Shen & Min-Ren Yan & Gwo-Hshiung Tzeng, 2017. "Exploring R&D Influences on Financial Performance for Business Sustainability Considering Dual Profitability Objectives," Sustainability, MDPI, vol. 9(11), pages 1-21, October.
    • Handle: RePEc:gam:jsusta:v:9:y:2017:i:11:p:1964-:d:116709
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/9/11/1964/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/9/11/1964/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Min-Ren Yan & Kuo-Ming Chien & Tai-Ning Yang, 2016. "Green Component Procurement Collaboration for Improving Supply Chain Management in the High Technology Industries: A Case Study from the Systems Perspective," Sustainability, MDPI, vol. 8(2), pages 1-16, January.
    2. JosÉ Figueira & Salvatore Greco & Matthias Ehrogott, 2005. "Multiple Criteria Decision Analysis: State of the Art Surveys," International Series in Operations Research and Management Science, Springer, number 978-0-387-23081-8, September.
    3. Wang, Chun-Hsien & Lu, Yung-Hsiang & Huang, Chin-Wei & Lee, Jun-Yen, 2013. "R&D, productivity, and market value: An empirical study from high-technology firms," Omega, Elsevier, vol. 41(1), pages 143-155.
    4. Macdonald, Stuart, 2004. "When means become ends: considering the impact of patent strategy on innovation," Information Economics and Policy, Elsevier, vol. 16(1), pages 135-158, March.
    5. Hee‐Jae Cho & Vladimir Pucik, 2005. "Relationship between innovativeness, quality, growth, profitability, and market value," Strategic Management Journal, Wiley Blackwell, vol. 26(6), pages 555-575, June.
    6. Dongmei Li, 2011. "Financial Constraints, R&D Investment, and Stock Returns," The Review of Financial Studies, Society for Financial Studies, vol. 24(9), pages 2974-3007.
    7. Dirk Czarnitzki & Hanna Hottenrott, 2011. "R&D investment and financing constraints of small and medium-sized firms," Small Business Economics, Springer, vol. 36(1), pages 65-83, January.
    8. Kao-Yi Shen, 2017. "Compromise between Short- and Long-Term Financial Sustainability: A Hybrid Model for Supporting R&D Decisions," Sustainability, MDPI, vol. 9(3), pages 1-17, March.
    9. Neuhäusler, Peter & Frietsch, Rainer & Schubert, Torben & Blind, Knut, 2011. "Patents and the financial performance of firms - An analysis based on stock market data," Discussion Papers "Innovation Systems and Policy Analysis" 28, Fraunhofer Institute for Systems and Innovation Research (ISI).
    10. Lai, Yung-Lung & Lin, Feng-Jyh & Lin, Yi-Hsin, 2015. "Factors affecting firm's R&D investment decisions," Journal of Business Research, Elsevier, vol. 68(4), pages 840-844.
    11. Laurence Booth & Christos Ntantamis & Jun Zhou, 2015. "Financial Constraints, R&D Investment, and the Value of Cash Holdings," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 5(04), pages 1-24, December.
    12. Bo-Wei Zhu & Jia-Rui Zhang & Gwo-Hshiung Tzeng & Shan-Lin Huang & Lei Xiong, 2017. "Public Open Space Development for Elderly People by Using the DANP-V Model to Establish Continuous Improvement Strategies towards a Sustainable and Healthy Aging Society," Sustainability, MDPI, vol. 9(3), pages 1-29, March.
    13. Opricovic, Serafim & Tzeng, Gwo-Hshiung, 2004. "Compromise solution by MCDM methods: A comparative analysis of VIKOR and TOPSIS," European Journal of Operational Research, Elsevier, vol. 156(2), pages 445-455, July.
    14. Thomas E. McKee, 2003. "Rough sets bankruptcy prediction models versus auditor signalling rates," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 22(8), pages 569-586.
    15. Min-Ren Yan & Kuo-Ming Chien, 2013. "Evaluating the Economic Performance of High-Technology Industry and Energy Efficiency: A Case Study of Science Parks in Taiwan," Energies, MDPI, vol. 6(2), pages 1-15, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hunady, Jan & Pisar, Peter, 2020. "Business Spending on Research and Development and its Relationship to Invention and Innovation," Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference (2020), Virtual Conference, in: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Virtual Conference, 10-12 September 2020, pages 542-552, IRENET - Society for Advancing Innovation and Research in Economy, Zagreb.
    2. Yang Gao & Yu Wang & Chien-Chi Chu & Sang-Bing Tsai & Xiaomin Du & Quan Chen, 2018. "Nonlinear Effect of Financial Efficiency and Financial Competition on Heterogeneous Firm R&D: A Study on the Combined Perspective of Financial Quantity Expansion and Quality Development," Sustainability, MDPI, vol. 10(5), pages 1-15, May.
    3. Min-Ren Yan & Kuo-Ming Chien & Lin-Ya Hong & Tai-Ning Yang, 2018. "Evaluating the Collaborative Ecosystem for an Innovation-Driven Economy: A Systems Analysis and Case Study of Science Parks," Sustainability, MDPI, vol. 10(3), pages 1-13, March.
    4. Marta Postuła & Wojciech Chmielewski & Piotr Puczyński & Rafał Cieślik, 2021. "The Impact of Information and Communication Technologies (ICT) on Energy Poverty and Unemployment in Selected European Union Countries," Energies, MDPI, vol. 14(19), pages 1-18, September.
    5. Kao-Yi Shen & Gwo-Hshiung Tzeng, 2018. "Advances in Multiple Criteria Decision Making for Sustainability: Modeling and Applications," Sustainability, MDPI, vol. 10(5), pages 1-7, May.
    6. Marta Postu?a & Wojciech Chmielewski, 2019. "The Impact of Intangible Assets and R&D Expenditure on the Market Capitalization and EBITDA of Selected ICT Sector Enterprises in the European Union," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(8), pages 117-117, August.
    7. Huňady, Ján & Pisar, Peter & Durcekova, Ina, 2019. "Business R&D Expenditure in the ICT Sector: Effects on Business Performance Indicators," Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference (2019), Rovinj, Croatia, in: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Rovinj, Croatia, 12-14 September 2019, pages 519-530, IRENET - Society for Advancing Innovation and Research in Economy, Zagreb.
    8. Yang-Chieh Chin & Wen-Zhong Su & Shih-Chih Chen & Jianing Hou & Yu-Chuan Huang, 2018. "Exploring Users’ Self-Disclosure Intention on Social Networking Applying Novel Soft Computing Theories," Sustainability, MDPI, vol. 10(11), pages 1-16, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yang Gao & Yu Wang & Chien-Chi Chu & Sang-Bing Tsai & Xiaomin Du & Quan Chen, 2018. "Nonlinear Effect of Financial Efficiency and Financial Competition on Heterogeneous Firm R&D: A Study on the Combined Perspective of Financial Quantity Expansion and Quality Development," Sustainability, MDPI, vol. 10(5), pages 1-15, May.
    2. Min-Ren Yan & Kuo-Ming Chien & Lin-Ya Hong & Tai-Ning Yang, 2018. "Evaluating the Collaborative Ecosystem for an Innovation-Driven Economy: A Systems Analysis and Case Study of Science Parks," Sustainability, MDPI, vol. 10(3), pages 1-13, March.
    3. Lin, Sheng-Hau & Zhao, Xiaofeng & Wu, Jiuxing & Liang, Fachao & Li, Jia-Hsuan & Lai, Ren-Ji & Hsieh, Jing-Chzi & Tzeng, Gwo-Hshiung, 2021. "An evaluation framework for developing green infrastructure by using a new hybrid multiple attribute decision-making model for promoting environmental sustainability," Socio-Economic Planning Sciences, Elsevier, vol. 75(C).
    4. Su, Zhong-qin & Xiao, Zuoping & Yu, Lin, 2019. "Do political connections enhance or impede corporate innovation?," International Review of Economics & Finance, Elsevier, vol. 63(C), pages 94-110.
    5. Yu, Lin & Liu, Xiaoquan & Fung, Hung-Gay & Leung, Wai Kin, 2020. "Size and value effects in high-tech industries: The role of R&D investment," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).
    6. Ioannis Sitaridis & Fotis Kitsios, 2020. "Competitiveness analysis and evaluation of entrepreneurial ecosystems: a multi-criteria approach," Annals of Operations Research, Springer, vol. 294(1), pages 377-399, November.
    7. Lei Xiong & Cheng-Lein Teng & Bo-Wei Zhu & Gwo-Hshiung Tzeng & Shan-Lin Huang, 2017. "Using the D-DANP-mV Model to Explore the Continuous System Improvement Strategy for Sustainable Development of Creative Communities," IJERPH, MDPI, vol. 14(11), pages 1-37, October.
    8. Ishizaka, Alessio & Nemery, Philippe & Lidouh, Karim, 2013. "Location selection for the construction of a casino in the Greater London region: A triple multi-criteria approach," Tourism Management, Elsevier, vol. 34(C), pages 211-220.
    9. Concetta Manuela La Fata & Toni Lupo & Tommaso Piazza, 2019. "Service quality benchmarking via a novel approach based on fuzzy ELECTRE III and IPA: an empirical case involving the Italian public healthcare context," Health Care Management Science, Springer, vol. 22(1), pages 106-120, March.
    10. Ahmed Mohammed & Irina Harris & Anthony Soroka & Mohamed Naim & Tim Ramjaun & Morteza Yazdani, 2021. "Gresilient supplier assessment and order allocation planning," Annals of Operations Research, Springer, vol. 296(1), pages 335-362, January.
    11. Ravi Kumar, P. & Ravi, V., 2007. "Bankruptcy prediction in banks and firms via statistical and intelligent techniques - A review," European Journal of Operational Research, Elsevier, vol. 180(1), pages 1-28, July.
    12. Agata Sielska, 2010. "Multicriteria rankings of open-end investment funds and their stability," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 20(1), pages 111-129.
    13. Ewa Roszkowska & Marzena Filipowicz-Chomko & Tomasz Wachowicz, 2020. "Using individual and common reference points to measure the performance of alternatives in multiple criteria evaluation," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 30(3), pages 77-96.
    14. P. Brighi & R. Patuelli & G. Torluccio, 2012. "Self-Financing of Traditional and R&D Investments: Evidence from Italian SMEs," Working Papers wp845, Dipartimento Scienze Economiche, Universita' di Bologna.
    15. Daniel R. Georgiadis & Thomas A. Mazzuchi & Shahram Sarkani, 2013. "Using multi criteria decision making in analysis of alternatives for selection of enabling technology," Systems Engineering, John Wiley & Sons, vol. 16(3), pages 287-303, September.
    16. Ateekh Ur Rehman & Syed Hammad Mian & Usama Umer & Yusuf Siraj Usmani, 2019. "Strategic Outcome Using Fuzzy-AHP-Based Decision Approach for Sustainable Manufacturing," Sustainability, MDPI, vol. 11(21), pages 1-22, October.
    17. GuoHua Cao & WenJun Geng & Jing Zhang & Qi Li, 2023. "Social network, financial constraint, and corporate innovation," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(3), pages 667-692, September.
    18. Sung-Lin Hsueh & Yue Sun & Min-Ren Yan, 2019. "Conceptualization and Development of a DFuzzy Model for Low-Carbon Ecocities," Sustainability, MDPI, vol. 11(20), pages 1-15, October.
    19. Chui-Hua Liu, 2020. "Strategies of Managing Coach Driver Job Stress for Sustainable Coach Tourism Industry—The Use of DANP-V Model," Sustainability, MDPI, vol. 12(9), pages 1-20, May.
    20. Xinxin Zhao & Zongjun Wang & Min Deng, 2019. "Interest Rate Marketization, Financing Constraints and R&D Investments: Evidence from China," Sustainability, MDPI, vol. 11(8), pages 1-17, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:9:y:2017:i:11:p:1964-:d:116709. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.