Abstract
Using an augmented version of Gibrat’s law, we theorized the relationship between the innovation activities of small and medium-sized enterprises (SMEs) and their growth in sales, firm value, and research and development (R&D) investment in the following years. Based on 17 years of data from 598 SMEs in South Korea, this study examined the mediating role of sales growth and firm value growth in the relationship between innovation activities and R&D investment growth in a longitudinal setting. The study findings suggested that the innovation activities of SMEs at Time 1 influenced the sales growth of high-growth firms and high-tech sectors at Time 2 more positively than that of low-growth firms and low-tech sectors, and that SMEs consequently invested more in R&D at Time 3. However, the innovation activities of SMEs at Time 1 did not significantly affect their firm value growth at Time 2. Theoretical and managerial implications are discussed for scholars, managers, and policy makers.
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Notes
We excluded data when they were not continuously available for 3 years, as we analyzed data for 3-year periods.
Main Science and Technology Indicators by OECD (http://stats.oecd.org).
SME Status Indicators 2016 by Korean Federation of SMEs (http://www.kbiz.or.kr).
We applied an OLS analysis with a robust option to take into account heteroscedasticity.
The quantile regression model was first introduced by Koenker and Bassett (1978).
Based on Sobel’s study (1982), we used this test to determine the mediating effect of the independent variable.
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Acknowledgements
The authors would like to thank the editor and anonymous reviewers for their considerable help in developing this manuscript. This manuscript was supported by a Korea University Grant. Please send theoretical inquiries to the corresponding author, Jeewhan Yoon (Email: towny@korea.ac.kr) and send analytical inquiries to the cocorresponding author, YoungJun Kim (Email: youngjkim@korea.ac.kr).
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Appendix: Empirical results for large firms
Appendix: Empirical results for large firms
See Figs. 5, 6 and Tables 9, 10, 11.
Quantile regression plots of Eqs. 3 and 4: Step 1 for large firms. Effects of innovation activities on small and medium-sized enterprise growth across the conditional quantiles of (a) sales growth and (b) firm market growth. The horizontal lines represent ordinary least squares estimates with 95% confidence intervals. Graphs were made using STATA module (Azevedo 2011)
Quantile regression plots of Eq. 5: Step 2 for large firms. Effects of small and medium-sized enterprise growth on R&D investment growth across the conditional quantiles of (a) sales growth and (b) firm market growth. The horizontal lines represent ordinary least squares estimates with 95% confidence intervals. Graphs were made using STATA module (Azevedo 2011)
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Ahn, S., Yoon, J. & Kim, Y. The innovation activities of small and medium-sized enterprises and their growth: quantile regression analysis and structural equation modeling. J Technol Transf 43, 316–342 (2018). https://doi.org/10.1007/s10961-017-9570-3
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DOI: https://doi.org/10.1007/s10961-017-9570-3