Showing papers on "R&D intensity published in 2008"

A Note on the Drivers of R&D Intensity

Abstract: The objective of this paper is to evaluate the extent to which technological specialization influences the observed R&D intensity of countries, and hence would bias the well-known country rankings that consist in comparing aggregate R&D intensity. The econometric analysis performed on a cross-country cross-industry panel dataset (21 industrial sectors, 10 countries, from 1991 to 2002) suggests that accounting for the technological specialization of countries drastically reduces the differences in relative R&D efforts observed at the country level. The only exception is Sweden (and the USA, but to a lower extent), which has an 'above-than-average' R&D intensity in most industries. Countries like Finland, Japan or Germany do not have an R&D intensity that is particularly higher than their industrial structure would predict.

Multinationality, R&D Intensity, and Firm Performance: Evidence from U.S. Manufacturing Firms

Abstract: We examine whether firms’ multinationality leads to better performance and what the role of R&D investment is in the multinationality performance linkage. Unlike the previous studies, we employ both accounting‐ and market‐based measures of firm performance for a large sample of U.S. manufacturing firms. Our results show that the empirical relation between multinationality and performance is not monotonic but varies with the phase of a firm’s multinationality, starting with a negative relation initially, followed by a positive one, and then again a negative one. This horizontal S‐shaped curvilinear relation of multinationality is more pronounced for the market‐based performance measure and is supportive of the three‐stage theory of internationalization. We also find that a firm’s multinationality is related to greater firm performance when the firm possesses R&D investment, and that the effect of R&D increases with the extent of a firm’s multinationality. These results lend strong support for the Internalization theory and the resource‐based view of firms’ international expansion. Our results are robust to different model specifications with an alternative measure of multinationality.

R&D Intensity, Value Appropriation and Integration Patterns within Organizational Boundaries

Abstract: Complementary insights from Transaction Cost Economics (TCE) and the Resource-Based View (RBV) of the firm are combined to predict the relationship between firm specific technological knowledge and patterns of integration within organizational boundaries. The findings show that the level of Research and Development (R&D) intensity (representing the creation of firm specific technological knowledge) has an inverted U-shaped relationship with the propensity of firms to integrate activities within organizational boundaries. At low levels of R&D intensity, firms’ propensity to integrate their activities is low, but increases with escalating levels of R&D intensity in order to avoid the misappropriation of value generated by technological knowledge.However, beyond a certain R&D intensity level, the propensity to integrate activities declines, since the level of technological knowledge is high enough to prevent imitation by third parties. As expected we further find that firms which follow this integration pattern outperform those which do not. As the level of R&D intensity increases, the integration of production and marketing activities enables firms to improve performance until a certain R&D intensity threshold, after which such integration negatively affects performance.

R&D spillovers through trade in a panel of OECD industries

Abstract: This paper investigates the significance of Research and Development (R&D) spillovers through intra- and international trade in intermediate goods for productivity growth in a panel of OECD industries during 1973–1994. In the model, four different sources of R&D are identified: R&D conducted in the particular industry itself, R&D conducted in the same industries in other countries, R&D conducted in other domestic industries, and R&D conducted in other foreign industries. I find that among R&D sources the most important contributions to productivity growth come from the domestic R&D efforts. Here, own R&D is important for both domestic innovation and for the productivity catch-up process. Evidence that international R&D spillovers also have significant effects on productivity growth is found to be less robust. My analysis also shows that human capital affects productivity directly as a factor of production.

R&D investment and performance in Korea: Korean R&D scoreboard 2005

Abstract: Summary This study develops a parsimonious model demonstrating the association between R&D expenditure and firm performance according to previous theoretical models. We call the model the “Korean R&D Scoreboard.” This model extensively analyzes R&D investment in the 2004 financial statements of 550 selected firms in Korea. The Scoreboard purports to identify the characteristics of industrial R&D investments and the relationship between the R&D investments and firm performance. The Scoreboard shows that the industrial R&D investments of Korean firms heavily leaned toward a few number of industries and a limited number of very large firms. Compared to the previous years, the electric and electronics industry and automobile and transportation industry have intensified their R&D investments further while other industries with low R&D intensity decreased in 2004. The “polarization phenomenon” of R&D investments shows the trend of “the rich getting richer and the poor getting poorer.” The Scoreboard also shows ...

Mispricing of Research and Development Investments in a Rapidly Emerging and Electronics-Dominated Market

Abstract: This paper documents prevailing mispricing of research and development (R&D) investments in the Taiwan stock market, a rapidly emerging and electronics-dominated market. Applying stock return data from July 1988 to June 2005, we observe that R&D-intensive stocks tend to outperform stocks with little or no R&D. The R&D-intensity effect cannot be attributed fully to firm size and seasonal effects. The R&D-associated anomaly not only exists but also persists for up to three years. The market apparently undervalues R&D-intensive firms and overvalues non-R&D-intensive firms. Finally, the R&D anomaly is clearer for firms in the electronics industry after 1996.

Technology and Finance

Abstract: The benefits from financial development are known to vary across industries. However, no systematic effort has been made to determine the technological characteristics that are shared by industries that tend to grow relatively faster in more financially developed countries. This paper explores a range of technological characteristics that might underpin differences across industries in the need or the ability to raise external funding. The main finding is that industries that grow faster in more financially developed countries tend to display greater R&D intensity or investment lumpiness, indicating that well-functioning financial markets direct resources towards industries that grow by performing R&D.

Capital budgeting methods, management control systems and the R&D intensity of the firm

Abstract: This paper investigates the effect of the Research and Development (R&D) intensity of the firm on the use of management control systems, capital budgeting methods and the methods to determine the cost of capital. Based on earlier literature, we develop several hypotheses that we test empirically, using survey data of the 101 Finnish firms operating in the capital area. The results indicate that the use of management control systems such as control and bonus systems, budgeting and strategic alliances increases with the degree of the R&D intensity of the firm. The results also indicate that high-R&D-intensity firms use formal capital budgeting methods within large and strategic projects. Finally, our results show that the use of sophisticated capital budgeting methods such as Net Present Value (NPV) and Internal Rate of Return (IRR) methods increases with the R&D intensity of the firm. Our results remain materially the same after controlling for several firm characteristics.

Research and Productivity Growth Across Industries

Abstract: What factors underlie industry differences in research intensity and productivity growth? We develop a multisector growth model using standard parameters to capture the main factors considered in the empirical R&D and productivity growth literature. Along the balanced growth path, we find that the primary factor behind industry differences in productivity growth is the extent to which new knowledge builds upon prior knowledge. In contrast, R&D intensity also depends upon the relative importance of different sources of prior knowledge. Quantitatively, we find that the key factor behind industry differences in both productivity growth and R&D intensity is the extent to which new knowledge builds upon prior knowledge, regardless of the source.

Research and Productivity Growth Across Industries

Abstract: What factors underlie industry differences in research intensity and productivity growth? We develop a multisector growth model using standard parameters to capture the main factors considered in the empirical R&D and productivity growth literature. Along the balanced growth path, we find that the primary factor behind industry differences in productivity growth is the extent to which new knowledge builds upon prior knowledge. In contrast, R&D intensity also depends upon the relative importance of different sources of prior knowledge. Quantitatively, we find that the key factor behind industry differences in both productivity growth and R&D intensity is the extent to which new knowledge builds upon prior knowledge, regardless of the source.

R&D Intensity and IPO Underpricing: Case Study on Pharmaceutical and Biotech Industries in the US

Abstract: Asymmetric information between the issuer to potential investors believed by some academics in finance as one of the main causes of the phenomenon of underpricing at the time of the initial public offering (IPO). On science and technology-based company main problem lies in how to conduct assessments on the future value of a product that is still in the development stage. The issue became more prominent on pharmaceutical companies and biotechnology, due to the characteristics of this industry is the high expense, complex process, and the lengthy process of research and development (R&D) of a product. This study describes the characteristics above is associated with the phenomenon of underpricing when companies conduct IPO. The samples are 82 pharmaceutical companies and biotechnology conduct IPO in the United States stock market in 1998-2005. The results of this study revealed a negative correlation between the intensity of R & D and IPO underpricing phenomenon in this industry. These studies have identified R&D as the main source of information asymmetry that led to the phenomenon of underpricing for pharmaceutical companies and biotechnology.

Ownership Type,the Institutional Environment and R&D Intensity of Chinese Listed Firms

Abstract: Using a sample of listed firms in manufacturing and information technology industries covering year 2002 to 2004 that have disclosed their RD expenditures in annual reports, this paper investigates the influence of ownership type, regional marketization and government funding on the RD intensity of listed firms. We find that, (1) the RD intensity of non-state controlled firms is significantly higher than that of state controlled firms; (2) the extent of regional marketization has a significant positive effect on RD intensity of non-state controlled firms, but no significant effect on that of state controlled firms; (3) the RD intensity of state controlled firms is significantly positively related to government funding, but that of non-state controlled firms is not.

R&D intensity and the performance of IPOs

Abstract: The importance of innovation resides in the nexus of competitive ability. This article investigates the relationship between Research and Development (R&D) intensity and the performance of Initial Public Offerings (IPOs) in Taiwan. Our empirical results show that most companies have lowered R&D intensity before IPO, whereas they slightly increase R&D intensity after issuance. That implies that earnings manipulation before going public may exist. An additional finding is that, those companies which have gradually increased their R&D intensity prior to IPO perform not only better than the market portfolio in the long run, but also superior to those which spent less in R&D before IPO.

Assessing the value of intangible assets: evidence from Japanese firms

Abstract: This study contributes to the literature on market signalling and resource-based view by examining the relationship between intangible assets, value, value outperformance and its sustainability within a sample of public Japanese firms. Results suggest that intangibles are positively related to either firm's value (R&D intensity and human capital) or value outperformance (R&D intensity and advertising intensity). Besides, our findings also suggest that intangible investments above industry average (human capital) increase the odd of being an outperformer firm.

R&D intensity and financial performance

Abstract: This study examines impacts of research and development (R&D) expenditure on the financial performance of Japanese manufacturing industries. For the purpose, we apply a discriminant analysis (DA) to group classification between non-default and default firms. The DA estimates a discriminant function using probit and logit models. The financial performance of a firm is evaluated by the estimated discriminant function. The relationship between the financial performance and R&D intensity is investigated using the function, as well. The results identify that R&D expenditure makes a positive impact on the financial performance of Japanese machinery industry, but it yields a negative impact on Japanese electrical equipment industry.

The R&D funding decision: the need for a systemic approach

Abstract: There is an abundance of techniques for selecting between potential R&D projects. A brief taxonomy of these indicates the importance of the role of both dynamics and learning in such evaluations. This may be an implicit indication that a systemic feature to the funding decision is required. System Dynamics (SD) then seems to be an appropriate method to explore resource allocation within R&D. Insight models using system dynamics further highlight the systemic nature of resource allocation decisions and a simple model confirms the importance of soft factors in such decisions. Hence we argue the need to develop and use a systemic approach to R&D resource allocation decisions.

An Analysis of Dynamism between Market Sensitivity to Technology and Optimal R&D Intensity

Abstract: The high-competitiveness firms improve their marginal productivity to technology by appropriate R&D activities for growth, and have raised their market value. On the other hand, in bigger firms, the contribution of the technology knowledge stock to growth decreases by their inappropriate restructuring of R&D activities. Based on the empirical analysis on Japan's electric machinery firms, this chapter attempts to demonstrate the dynamism between firms' R&D, technological development and market reaction. The results of those analyses indicate that the dynamism between improvement of quality of technology through efficient R&D investment and market evaluation can be forming a virtuous circle depending not on quantity but on the corporate institution that promotes structural reform.

Innovating the innovators: the case for transformational energy research and development

Abstract: This paper asks three interconnected questions: What type of energy R&D promotes long-term, transformative innovation? Which types of research do energy R&D organisations predominately practice? What are the consequences of their approaches? The paper begins by distinguishing between incremental and transformative R&D. Then, it documents five emerging energy challenges facing the USA and the world. Using the US Department of Energy (DOE) as a case study, it next explores whether that organisation is more dedicated to promoting incremental innovation or transformative change. The article concludes by offering some preliminary implications for American and international energy policy.