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R&D, productivity, and market value: An empirical study from high-technology firms

  • Wang, Chun-Hsien
  • Lu, Yung-Hsiang
  • Huang, Chin-Wei
  • Lee, Jun-Yen
Registered author(s):

    Although prior research has addressed the influence of production activity and research and development (R&D) on productivity, it is not clear whether production and R&D affect the market value of a firm. This study proposes and verifies an R&D value chain framework to explore the relationship among productivity, R&D, and firm market values, as measured by Tobin's q theory. By doing so, we attempt to link new theoretical insights and empirical evidence on the effects of R&D efforts and basic production activities to the market valuations of high-technology firms. The value chain data envelopment analysis approach was proposed to estimate parallel-serial processes of basic operations and R&D efforts. This approach can be used to simultaneously estimate the profitability efficiency and marketability efficiency of high-technology firms. This area has rarely been studied, but it is particularly important for high-technology R&D policies and for further industrial development. Using the R&D value chain perspectives of model innovations and extensions proposed in several previous studies, we examined the appropriate levels of intermediate outputs. Production efficiency and R&D were combined to estimate the appropriate levels of intermediate outputs for high-technology firms. Based on the intermediate output analyses, we developed an R&D efforts decision matrix to explore and identify operational and R&D efficiency for high-technology firms. Our sample firms are displayed on a four-quadrant action grid that provides visual information on current short-term operational efficiency and decision making on long-term R&D strategic positions. The empirical findings from the R&D value chain model can provide information for policymakers and managers and suggest the adoption of various policies that place more emphasis on profitability and marketability strategies.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0305048312000266
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    Article provided by Elsevier in its journal Omega.

    Volume (Year): 41 (2013)
    Issue (Month): 1 ()
    Pages: 143-155

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    Handle: RePEc:eee:jomega:v:41:y:2013:i:1:p:143-155
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