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R&D Expenditures and Geographical Sales Diversification

Author

Listed:
  • Christopher F Baum

    (Boston College
    DIW Berlin)

  • Mustafa Caglayan

    (Heriot-Watt University)

  • Oleksandr Talavera

    (University of Sheffield)

Abstract

This paper empirically examines the role of diversification in export markets on firm-level R&D activities. We show that geographical sales diversification across different regions of the world induces UK firms to increase their R&D expenditures, as firms must innovate and develop new products to maintain a competitive edge over their rivals. This finding is robust to a battery of sensitivity checks. Furthermore, we find no evidence of reverse causality between R&D and sales diversification.

Suggested Citation

  • Christopher F Baum & Mustafa Caglayan & Oleksandr Talavera, 2012. "R&D Expenditures and Geographical Sales Diversification," Boston College Working Papers in Economics 794, Boston College Department of Economics, revised 12 Nov 2012.
    • Handle: RePEc:boc:bocoec:794
    Note: Previously circulated as "R&D Expenditures and Export Sales Diversification"
    as

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    Cited by:

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    2. L. Benfratello & A. Bottasso & C. Piccardo, 2022. "R&D and export performance: exploring heterogeneity along the export intensity distribution," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(2), pages 189-232, June.
    3. Andreas Kaloudis & Dimitrios Tsolis, 2019. "Capital Structure and Speed of Adjustment in U.S. Firms. Α Comparative Study in Microeconomic and Macroeconomic Conditions-A Quantile Regression Approach," International Business Research, Canadian Center of Science and Education, vol. 12(10), pages 98-109, October.
    4. Vergara, Sebastián, 2021. "The role of productive and technological capabilities in export dynamics in developing countries," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    5. Coad, Alex, 2019. "Persistent heterogeneity of R&D intensities within sectors: Evidence and policy implications," Research Policy, Elsevier, vol. 48(1), pages 37-50.
    6. Alex Coad, 2017. "Persistent heterogeneity of R&D intensities within sectors: Evidence and policy implications," JRC Working Papers on Corporate R&D and Innovation 2017-04, Joint Research Centre (Seville site).
    7. Vannoorenberghe, Gonzague & Wang, Zheng & Yu, Zhihong, 2016. "Volatility and diversification of exports: Firm-level theory and evidence," European Economic Review, Elsevier, vol. 89(C), pages 216-247.
    8. Bettina Becker, 2013. "The Determinants of R&D Investment: A Survey of the Empirical Research," Discussion Paper Series 2013_09, Department of Economics, Loughborough University, revised Sep 2013.
    9. Yixiao Zhou & Ligang Song, 2016. "International Trade and R&D Investment: Evidence from Chinese Manufacturing Firms," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 24(1), pages 63-84, January.
    10. Anne W. Fuller, 2018. "Toward a Perspective on R&D Outsourcing: RBV and Firm Performance," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 15(05), pages 1-14, October.
    11. Gao, Wenlian & Chou, Julia, 2015. "Innovation efficiency, global diversification, and firm value," Journal of Corporate Finance, Elsevier, vol. 30(C), pages 278-298.

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    More about this item

    Keywords

    R&D investment; Export diversification; Foreign direct investment; Cash holdings;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models

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