DocumentCode :
1301501
Title :
The Relationship Between R&D Investment and Firm Profitability Under a Three-Stage Sigmoid Curve Model: Evidence From an Emerging Economy
Author :
Yang, Kuo-Pin ; Chiao, Yu-Ching ; Kuo, Chih-Chung
Author_Institution :
Dept. of Int. Bus., Nat. Dong Hwa Univ., Hualien, Taiwan
Volume :
57
Issue :
1
fYear :
2010
Firstpage :
103
Lastpage :
117
Abstract :
The relationship between investment in research and development (R&D) and firm performance has been the subject of numerous academic investigations, but the findings of these investigations have varied greatly, with research revealing a number of different patterns in the R&D-performance relationship. This inconsistency may be partly attributable to the failure of the commonly used linear modeling method to capture the full dynamics of the R&D-performance relationship. Based on the sigmoid (S) curve paradigm, as well as on other economic foundations, this study proposes the use of a three-stage S-curve model to help reconcile the disparities in the literature. This S-curve model shows that the relationship between R&D intensity and firm profitability is nonlinear, with the slope negative at low levels (stage 1), positive at medium levels (stage 2), and negative again at high levels of R&D investment (stage 3). Empirical evidence from a sample of 377 publicly listed Taiwanese high-tech manufacturing firms and 179 nonhigh-tech firms, examined during the period between 2000 and 2007, confirmed our proposed model. This study not only establishes a relationship pattern that differs from that shown in past studies, but also has important managerial implications for R&D managers and important policy implications for governments.
Keywords :
industrial economics; investment; organisational aspects; profitability; research and development management; R&D investment; S-curve model; emerging economy; firm performance; firm profitability; manufacturing firm; nonhigh-tech firm; research and development; three-stage sigmoid curve model; Educational institutions; Engines; Government; Investments; Measurement; Productivity; Profitability; Research and development; Research and development management; Technological innovation; Virtual manufacturing; Optimal level; performance; research and development (R&D); sigmoid (S) curve; threshold;
fLanguage :
English
Journal_Title :
Engineering Management, IEEE Transactions on
Publisher :
ieee
ISSN :
0018-9391
Type :
jour
DOI :
10.1109/TEM.2009.2023452
Filename :
5208288
Link To Document :
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