Showing papers on "R&D intensity published in 2009"

R&D Intensity, Marketing Intensity, and Organizational Performance

Abstract: Companies have recognized that one of the routes to sustainable competitive advantage is to invest in both marketing and RD Walwyn, 2005). Surprisingly, there is little research in the business discipline on the outcomes of investing in both these vital functions. Prior research in marketing and management has been confined to three sets of studies. In the first set of studies, researchers have focused on the impact of marketing and R&D integration on various organizational processes such as new product development, product life cycles, development time, and knowledge diffusion. The second set of studies has focused on the impact of marketing investments or R&D investments on the bottom line without considering the joint impact of these two vital functions (Lee and O'Neill, 2003). Third, earlier studies have been limited to single industries. For example, in a single industry study, Wright, Kroll, Chan and Hamel (1991) have argued that successful firms were those that were efficient marketers, or those which spend relatively heavily on R&D as well as marketing. Lin, Lee, and Hung (2006), likewise, have argued for the joint impact of R&D and commercialization efforts on performance in technology-intensive industries. In today's environment, with increased off-shoring of the manufacturing function by U.S.-based industries to other nations, marketing and R&D have emerged as key functions in the value chain for all major manufacturing and service industries. This study makes two notable contributions to the field. First, it is the first study, to our knowledge, to examine the implications of the joint impact of marketing and R&D investments on organizational performance in a wide range of industries and, second, it employs lagged organizational performance to test the major hypothesis. Based on anecdotal evidence in this area, this study empirically tests the hypothesis that investments in both marketing and R&D are necessary for superior organizational performance. No company exemplifies this argument better than Procter & Gamble, the leading consumer products company. Procter & Gamble has a unique approach to innovation and has based its competitive advantage on understanding customers, acquiring, developing, and applying technology across its broad array of product categories and making connections between consumer wants and what technology can deliver (www.pg.com). Recently, to increase productivity in the R&D and marketing interface, the company has developed a new model for innovation entitled, "connect and develop" (Huston and Sakkab, 2006). A second company to base its competitive advantage on linking R&D and marketing is Silicon Graphics which obtained input from its customers to incorporate video conferencing into its successful desktop offerings (Andrews, 1999). …

R&D in Indian manufacturing enterprises: what shapes it?

Abstract: The article examines the factors influencing research and development (R&D) in manufacturing entities. Using data on a large sample of companies for the period 1995–2007, the finding indicates that large companies have a higher probability of pursuing R&D, although with lower intensity. In terms of magnitudes, a 10% increase in firm size raises R&D intensity by roughly 0.6%. Both the intensity and the probability of undertaking R&D initially declines for older firms. Outward orientation, and especially foreign currency earnings, has a significant bearing on R&D efforts. R&D efforts are also found to vary significantly across firm ownership.

The relationship between R&D concentration and industry R&D intensity: a simple model and some evidence

Abstract: This study aims to demonstrate that the concentration (or distribution) of firm R&D intensities within an industry is closely related to the overall R&D intensity of the industry. Unlike the well-studied relationship between sales concentration, or market structure, and industry R&D intensity, the relationship between the concentration of R&D in an industry and its overall R&D intensity has not been explored before. We present a simple model of industry R&D intensity, in which R&D concentration, R&D appropriability, and industry-wide technological opportunities jointly determine industry R&D intensity. In particular, we show that, all else being equal, the more skewed the distribution of firm R&D intensities, the higher the level of industry R&D intensity. We use a six-year panel dataset on the R&D intensities, R&D appropriability, and technological opportunities of four-digit SIC Korean manufacturing industries during the period 1991–1996.

A Multi-industry Model of Growth with Financing Constraints

Abstract: This paper develops a multi-industry growth model in which firms require external funds to conduct productivity-enhancing R&D. The cost of research is industry-specific. The tightness of financing constraints depends on the level of financial development and on industry characteristics. Over time, a financially constrained economy may converge to the growth path of a frictionless economy, so long as an industry with the fastest expanding technological frontier does not permanently fall behind due to low R&D. The model’s industry dynamics map into a differences-in-differences regression, in which industry growth depends on the interaction between financial development and industry level R&D intensity.

Accounting for research and productivity growth across industries

Abstract: What factors underlie industry differences in research intensity and productivity growth? We develop a multi-sector endogenous growth model allowing for industry specific parameters in the production functions for output and knowledge, and in consumer preferences. We find that industry differences in both productivity growth and R&D intensity mainly reflect differences in 'technological opportunities', interpreted as parameters of knowledge production. These include the capital intensity of R&D, knowledge spillovers, and diminishing returns to R&D. Among these parameters, we find that the degree of diminishing returns to R&D is the dominant factor when the model is calibrated to account for crossindustry differences in the US.

Sectoral R&D Intensity and Exchange Rate Volatility: A Panel Study for OECD Countries

Abstract: A recent literature has pointed at potential negative effects of exchange rate volatility on innovation. In this paper, we propose that there may be a direct effect as well as an indirect effect via export activity. We test these hypotheses for sectoral R&D intensities using OECD panel data for manufacturing and services sectors for 14 OECD economies and the years 1987 - 2003. We find that the direct negative effect of volatility is pronounced in manufacturing sector but is dominated by the indirect effect via the export channel. Services do not face any effects of volatility on R&D intensities. While it is not clear which channel dominates our results confirm that there is a negative volatility affect related to openness on a sectoral level.

Business R&D Expenditure and Capital in Europe

Abstract: This study presents new estimates of business R&D capital stocks for 22 countries at the aggregate and industry levels. At 9 percent of GDP, the EU business R&D capital stock falls short of its US and Japanese counterparts. Within the EU, R&D capital stocks are much lower in the southern and the new member states, reflecting large and persistent disparities in R&D expenditure. There was hardly any convergence over the past decade. The R&D capital stock is concentrated on three technology-intensive manufacturing industries and is positively correlated with growth in total factor productivity across countries and industries. Finally, the ratios between the stocks of R&D capital and tangible capital suggest marked differences in how R&D and tangible capital are combined in production.

The Performance of Top R&D Investing Companies in the Stock Market

Abstract: Based on an original data set with information of a representative portfolio of among the largest 304 R&D investing companies over the 2003-2006 period, the overall analysis, except in a few cases, gives some robust evidence of a positive relationship between top R&D-investing companies and their performance in the stock markets as measured by the evolution of their market capitalisations' values. In terms of sectors, companies in the pharmaceuticals and biotechnology and software & computer services sectors in the UK and the chemicals sector in Germany appear to outperform the respective sectoral stock market indexes in which they operate. On the other hand some other sectors, such as technology hardware and equipment one in France, show an underperforming behaviour. Empirical findings from the econometric analysis suggest a positive impact of the firm's R&D intensity on its market capitalisation performance. Besides some data limitations which call for further investigations, R&D investment can without uncertainty be acknowledged as representing an important strategic element for companies' economic and financial performance, but is not the only one. To name a few of them, framework conditions in the economy, marketing activities and the level of market power of companies are only other important factors that have an impact on companies' performances which are also reflected on their stock markets values.

R&D Intensity and the NPD Portfolio

Abstract: A key metric for the assessment of innovative activity at the firm level is R&D intensity. R&D intensity is the ratio of a firm's R&D investment to its revenue (the percentage of revenue that is reinvested in R&D). Empirical and anecdotal evidence suggests that R&D intensity within an industry is remarkably consistent. Despite this consistency in R&D spending, firms tend to be differentiated with respect to their NPD portfolio strategy and overall performance. This study aims to explain the observed consistency in R&D intensity for firms within an industry, despite the varying choices in terms of how much the firm invests in R&D and how resources are allocated among projects in a portfolio. We consider the implications of firm level factors, such as NPD portfolio composition, as well as industry level factors, such as competition intensity and environmental stability. We find that R&D intensity alone does not explain firm performance. Rather, it is the proper alignment between R&D intensity (how much the firm invests) and NPD portfolio strategy (how the firm invests the money) that drives profitability. More importantly, the proper alignment critically depends on two industry factors - competition intensity and environmental stability.

Mergers and Acquisitions (M&AS) by R&D Intensive Firms

Abstract: In this study, we evaluate the impact of R&D intensity on acquiring firms’ abnormal returns by examining 925 Canadian completed deals between 1993 and 2002 that have information on R&D expenditures. While examining the returns to acquiring firm shareholders in the R&D intensive firms we evaluate two competing hypotheses: ‘growth potential hypothesis’ and ‘integration failure hypothesis’. According to the ‘growth potential hypothesis’, in light of the growth potential of the targets acquired by R&D intensive firms, investors are likely to react positively. ‘Integration failure hypothesis’ focuses on integration difficulties of a target by an R&D intensive firms and suggests that investor might be skeptical of such acquisitions and react negatively. Our results show that R&D intensity (i.e. R&D expenditure by sales) has a positive and significant effect on cumulative abnormal returns of the acquiring firms around the announcement dates. This implies that market generally favors the M&A deals by R&D intensive firms. An analysis of the differentiating characteristics reveal that R&D firms have a significantly higher growth potential and undertake more stock financed deals compared to the non R&D firms. Further, our results show that there is no significant change in long-term operating performance subsequent to the M&A deals for both R&D firms and non R&D firms. In general, our results show support for ‘growth potential hypothesis’.

The effect of R&D and technology commercialization capabilities on the innovation performance of Korean it SMEs: The case of direct and indirect recipients of public R&D funding

Abstract: This paper investigates the relationship between RD learning and external networking also had a significant influence on innovation. The research implication of this finding is that the measurement of firms' performance should not be solely based on the intensity of R&D expenditures, but a broader set of factors including learning and external networking capabilities. Second, the technology commercialization capabilities of firms played the role of a mediator in the relationship between R&D and innovation performance. Within the innovation cycle of input (R&D capabilities), process (technology commercialization capabilities) and output (innovation performance), we found that R&D seldom influenced performance in a direct fashion, but its influence was most often mediated by technology commercialization capabilities. The practical implication of this finding for companies is that in order to improve performance, they must avoid narrowly focusing on R&D, but must invest also in capabilities to commercialize technologies resulting from R&D. Third, when direct and indirect beneficiaries of public R&D funding are compared together, the explanatory power of the relationship between R&D capabilities, technology commercialization capabilities and innovation performance was stronger among the latter than the former. This result suggests that indirect technology support toward Korean IT SMEs through government-sponsored research institutions is a more effective way of allocating public R&D funds than direct funding in the form of grants to individual companies. In other words, sponsoring R&D projects at research organizations with high-quality manpower and equipment and facilities like government research institutions, which are more likely to result in technologies that are readier for commercialization and have greater value-added, and transferring resulting technologies to small and medium-size ventures is a better strategy for enhancing national technological competitiveness in IT.

R&D Intensity, Technology Transfer and Absorptive Capacity

Abstract: In the line of Schumpeterian fully endogenous growth theory, this study attempts to investigate whether differences in research intensity as well as absorptive capacity help to explain cross-country differences in productivity growth in a panel of 55 sample countries including 23 OECD and 32 developing economies over the period 1970 to 2004. Using several indicators of innovative activity and product variety empirical results from system GMM estimator confirm that research intensity has significant positive effect on productivity growth in both the OECD and developing countries. TFP growth is also found to be enhanced by the distance to technology frontier in both the group of countries. R&D based absorptive capacity seems to have significant positive impact on productivity growth in both the groups though strong in OECD countries. Human capital based technology transfer is found significant and robust in both the OECD and developing countries. Absorptive capacity appears to be sensitive to the model specification and measurement of innovative activity as well as product variety.

Financing Creative Destruction

Abstract: This paper uncovers evidence of s potentially important channel linking financial development to growth: the financing of innovations introduced by entrepreneurs. Using internationally comparable data on European countries, entry and exit in research-intensive industries are found to be disproportionately sensitive to the level of financial development. Furthermore, financial development is related to increased R&D spending. The results are robust to several different measures of financial development, and are supported by surveys of the sources of finance used by entrepreneurs. The evidence suggests that intellectual property rights provide the institutional underpinning for financial markets to direct funds towards innovative entrepreneurs.

Bussines R&D expenditure and capital in Europe.

Abstract: This study presents new estimates of business R&D capital stocks for 22 countries at the aggregate and industry levels. At 9 percent of GDP, the EU business R&D capital stock falls short of its US and Japanese counterparts. Within the EU, R&D capital stocks are much lower in the southern and the new member states, reflecting large and persistent disparities in R&D expenditure. There was hardly any convergence over the past decade. The R&D capital stock is concentrated on three technologyintensive manufacturing industries and is positively correlated with growth in total factor productivity across countries and industries. Finally, the ratios between the stocks of R&D capital and tangible capital suggest marked differences in how R&D and tangible capital are combined in production.

Measurement of Factors Impacting the Technology Innovation Level Based on Categorical Regression

Abstract: This paper constructed an impacting factor model of technology innovation of SMEs including 10 factors,such as financial capital,R D intensity,innovation network etc.Based on a survey with a sample of 188 SMEs in Shanghai and Shenzhen,this study explored the factors and mechanism impacting the technology innovation of SMEs by using Factor Analysis and Categorical Regression.This result indicates that 8 factors such as financial capital,R D intensity,technically qualified staffs,have positive effect on technology innovation of SMEs,and among which the effect of R D intensity and financial capital is most significant.However,it finds that current policies have negative effect on innovation of SMEs.

The effect of R&D intensity on corporate social responsibility

Abstract: This study examines the impact that Research and Development (R&D) intensity has on Corporate Social Responsibility (CSR). We base our research on the Resource Based View (RBV) theory, which contributes to our analysis of R&D intensity and CSR because this perspective explicitly recognizes the importance of intangible resources. Both R&D and CSR activities can create assets that provide firms with competitive advantage. Furthermore, the employment of such activities can improve the welfare of the community and satisfy stakeholder expectations, which might vary according to their prevailing environment. As expressions of CSR and R&D vary throughout industries, we extend our research by analyzing the impact that R&D intensity has on CSR across both manufacturing and non-manufacturing industries. Our results show that R&D intensity positively affects CSR and that this relationship is significant in manufacturing industries, while a non-significant result was obtained in non-manufacturing industries.

A Multi-industry Model of Growth with Financing Constraints

Abstract: We develop a general equilibrium multi-industry model in which firms use external funds to conduct productivity-enhancing R&D. Industries differ in terms of research costs, which lead them to different optimal research expenditures. In the model, more R&D-intensive industries require more external funding, and tend to grow relatively faster in more financially developed environments -- consistent with empirical evidence. As a result, industry composition and the level of financial development have joint implications for aggregate growth and for equilibrium patterns of structural change. Aggregate growth in a financially underdeveloped economy converges to that in a frictionless benchmark economy, so long as its fastest-growing industry is not financially constrained. We show that equilibrium industry dynamics in the model can be approximated using a differences-in-differences industry growth regression that links financial development to industry growth.

Income Convergence and R&D Intensity in OECD Manufacturing Industries: A Panel Study

Abstract: This paper evaluates the impact of R&D investment on income convergence for a cross section of manufacturing industries in 12 OECD countries over the time period 1987-1999. We apply dynamic panel estimation techniques to obtain a speed of convergence which, when conditioned to R&D expenditure, is significantly greater than the conventional 2%. In particular, the inclusion of the R&D variable results to a speed of convergence of 7-9% per year, suggesting that convergence is faster between equally technologically advanced industries. A further implication from our results is that differences in the industry mix can be important in explaining the speed of income convergence between countries.

Renewable energy innovations in Europe: A dynamic panel data approach

Abstract: We investigate the determinants of renewable energy R&D intensity and the impact of renewable energy innovations on firm performance, using several dynamic panel data models. We estimate these models using a large dataset of European firms of 19 different countries, with some patenting activity in areas related with renewable energies during the 1987-2007 period. The results that we obtain confirm our a prioris on the determinants of the rapid development of renewable energy R&D intensity during the last decades. Additionally, we find evidence that renewable patent intensity has significant dynamic impact on the stock market value of firms.

R&D Intensity in the Brazilian Industry: Some Distributional Regularities

Abstract: Previous empirical results on the determinants of R&D intensity have indirectly suggested the relevance of unobserved R&D-related capabilities Cohen and Klepper (1992) have developed a probabilistic model that is able to conform with well known stylized facts on the R&D intensity distribution such as clustering around zero, unimodality and positive skewness and generates well defined predictions about the correlation between the different distribution moments (mean, variance, coefficient of variation and skewness) The evidence for 3-digits sectors of the manufacturing industry in Sao Paulo is to a great extent consistent with the referred theoretical model

Multinational ownership and R&D intensity: The role of external knowledge sources and spillovers

Abstract: This paper analyzes the drivers of multinational affiliates' R&D intensity, using a unique dataset based on the fourth Community Innovation Survey for Belgium. Specifically, we investigate the role of foreign affiliates' local (host country) embeddedness and of host country spillovers on foreign affiliates' research efforts. Our findings show that foreign affiliates who are able to tap into local knowledge sources demonstrate a higher research intensity, compared to firms lacking such access. Links to clients and public research institutions, in particular, have a powerful impetus on the research effort by foreign subsidiaries. Our findings suggest a complementary relationship between foreign firms' R&D intensity and the internal research efforts of their competitors as a result of demonstration effects, while the use of external R&D by competitors has a negative impact on the research effort of foreign affiliates as a result of technological spillovers. Our findings have important policy implications, especially in terms of the high dependency of the Belgian economy on foreign R&D. One way to attain the R&D intensity put forward by the Lisbon agenda would be to increase public expenditure on research and development, which would also indirectly increase the research intensity of (foreign) firms.

The Empirical Research about the Relationship of Chinese Regional R&D Expenditure and Economical Development

Abstract: The paper empirically research the relationship of Chinese regional RD expenditure and regional economical development based on panel data model and the provincial data during 2000-2006's.The result indicated that different regional RD expenditure is very different,occasionally there are the inverse "U" relationship between the regional RD expenditure and regional economy.The effect of RD is prima in the secondary RD expenditure regions,the effect is secondary in the maximum RD regions and the effect is very little in the small regions.So the paper has some advices about the policy.

Is ipo the death of innovation

Abstract: This study examines whether changes made in the composition of the board of directors at the time of a firm’s initial public offering are related to changes in the firm’s innovation activity. The dependent variable is the change in R&D intensity from the pre-IPO period to the post-IPO period. Using a sample of 93 biotechnology or semiconductor firms with an IPO during the years 1996 – 2005, we find that changes in R&D intensity are negatively related to changes in (a) board size, (b) the percentage of members who are venture capitalists, and (c) the percentage of members with a science education and positively related to the change in age diversity.