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Unraveling the impact of R&D investment on corporate growth: Empirical insights on intensity- and growth rate-based differences

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  • Morina, Drini
  • Lucas, Henning
  • Heiden, Stefanie

Abstract

This paper examines intensity- and speed-based differences in the short-term relationship between R&D investment and corporate growth of over 2,000 high-tech firms from 2000 to 2020 using semiparametric quantile models. Although R&D investment is often assumed to be a candidate supporting the recovery of declining firms, a positive impact has yet only been revealed for high-growth firms. This study finds that this effect is only positive at high intensities, roughly above a 50 % R&D-to-sales ratio, and that the threshold is higher for declining firms, at about 130 %. These findings contribute to the understanding of the relationship and are valuable for managers as they consider R&D investments to enhance corporate growth.

Suggested Citation

  • Morina, Drini & Lucas, Henning & Heiden, Stefanie, 2025. "Unraveling the impact of R&D investment on corporate growth: Empirical insights on intensity- and growth rate-based differences," Finance Research Letters, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:finlet:v:74:y:2025:i:c:s1544612324017513
    DOI: 10.1016/j.frl.2024.106722
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    More about this item

    Keywords

    R&D effects; Corporate growth; Semiparametric quantile regression;
    All these keywords.

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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