R&D Expenditures, New Product Introductions, and Sales Performance with Application to the Furniture Industry

Research and Development, new product introduction are considered as important determinants of overall company performance and most firms allocate great share to these activities from their budget. Recent studies show that firms with sound R&D strategies are performing better than those with no consistent R&D strategies. On the other hand, unless companies offer new and innovative products, they feel in price competition. Therefore new product introduction and R&D activities emerge as competitive tool to distinguish companies from its competitors. Purpose of this study is to examine how new product introduction and R&D activities influence firm’s performance as measured sales growth with application to the furniture industry. A model developed and analyzed using Lisrel software, and results yield that both new product introduction and R&D have positive effect on performance.