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Short- and long-run effects of internationalization and R&D intensity on firm performance

Author

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  • Vithessonthi, Chaiporn
  • Racela, Olimpia C.

Abstract

Investing in building new knowledge and capability is likely to benefit a firm in the long run but has a negative effect on the firm’s short-term performance. Firms that exploit their knowledge base across foreign markets better than their competitors should have superior firm performance. Using a dataset that covers all non-financial firms listed on US stock exchanges during the period 1990–2013, we show that the level of R&D intensity is negatively associated with operating performance and is positively correlated with firm value. The negative effect of R&D intensity on ROS is evident for high R&D firms and is not evident for low R&D firms. The level of internationalization has no effect on ROA, a positive effect on ROS, and a negative effect on both stock returns and Tobin’s Q. Furthermore, we document some evidence for the moderating effect of internationalization on the relationship between R&D intensity and firm performance.

Suggested Citation

  • Vithessonthi, Chaiporn & Racela, Olimpia C., 2016. "Short- and long-run effects of internationalization and R&D intensity on firm performance," Journal of Multinational Financial Management, Elsevier, vol. 34(C), pages 28-45.
    • Handle: RePEc:eee:mulfin:v:34:y:2016:i:c:p:28-45
    DOI: 10.1016/j.mulfin.2015.12.001
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    References listed on IDEAS

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    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • G1 - Financial Economics - - General Financial Markets
    • G3 - Financial Economics - - Corporate Finance and Governance

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