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International Strategy, R&D Intensity, and Sustainable Earnings of Biotech Firms

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  • Jaehong Lee

    (College of Business, Sangmyung University, Seoul 03016, Korea)

  • Young Soo Yang

    (Leeds University Business School, University of Leeds, Leeds, LS2 9JT, UK)

Abstract

For a relatively small country such as Korea to successfully establish its presence in the global biotech industry, it must pair a successful domestic model with an effective export strategy. However, there are little empirical findings on the relationship between biotech firms’ internationalization strategy, research and development (R&D) intensity, and sustainable earnings. Thus, we explore this often overlooked area by analyzing the relationship between the international strategies and sustainable earnings of biotech firms. By using a sample of 29,583 firm-year observations in South Korea between 2000 and 2017, this study analyzes the association between internationalization strategy and sustainable earnings. Findings from the analysis show that internationalization strategy has a negative impact on biotech firms. However, the impact of international strategy on sustainable earnings of a biotech firm is observed to be positively influenced by R&D intensity. This study contributes to the research on the determinants of sustainable earnings by empirically proving that biotech firms’ internationalization strategy with high R&D investments leads to an increase in earnings sustainability.

Suggested Citation

  • Jaehong Lee & Young Soo Yang, 2019. "International Strategy, R&D Intensity, and Sustainable Earnings of Biotech Firms," Sustainability, MDPI, vol. 11(17), pages 1-17, September.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:17:p:4772-:d:263108
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