Abstract
In the global world R&D is at the core of business strategy for companies to maintain their competitive position on the market. Nowadays, R&D activity is becoming linked with firms' growth and profitability. The understanding of the linkage between R&D activity and firm performance is relevant to R&D departments as it helps managers to make strategic choices. This study aims to examine the flow of knowledge in the research area and suggest guidelines for future research. The study mainly focuses on the field of R&D management and provides a systematic literature review by applying complementary bibliometric analysis techniques: co-citation analysis of references and bibliographic coupling analysis of documents. I systematically analyze the existing literature published in peer-reviewed journals from 1980 to 2020. It is found that the literature insists on contradictory results about the relationship between R&D and firm performance. Moreover, there is a quite limited amount of studies concerning the role of various factors affecting R&D-performance relationships. For theory development, this paper summarizes the main concepts in the field and identifies several research gaps of the literature in terms of theory and methodology. It also establishes a conceptual framework of the study and provides suggestions for future research. From managerial perspectives, the study shades a light on the question of whether R&D activity is linked to gaining a higher profitability and provides guidelines for policy makers with regard to the implications of strategic decision-making in R&D.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Aghion P, Howitt P (1990) A model of growth through creative destruction. Econometrica 60:323–352. https://doi.org/10.3386/w3223
Anagnostopoulou SC (2008) R&D expenses and firm valuation: a literature review. Int J Account Inf Manag 16:5–24. https://doi.org/10.1108/18347640810887735
Ba S, Lisic LL, Liu Q, Stallaert J (2013) Stock market reaction to green vehicle innovation. Prod Oper Manag 22:976–990. https://doi.org/10.1111/j.1937-5956.2012.01387.x
Banerjee R, Gupta K (2019) The effect of environmentally sustainable practices on firm R&D: international evidence. Econ Mod 78:262–274. https://doi.org/10.1016/j.econmod.2018.09.024
Becker B (2015) Public R&D policies and private R&D investment: a survey of the empirical evidence. J Econ Surv 29:917–942. https://doi.org/10.1111/joes.12074
Bellucci A, Pennacchio L, Zazzaro A (2019) Public R&D subsidies: collaborative versus individual place-based programs for SMEs. Small Bus Econ 52:213–240. https://doi.org/10.1007/s11187-018-0017-5
Berchicci L (2013) Towards an open R&D system: internal R&D investment, external knowledge acquisition and innovative performance. Res Policy 42:117–127. https://doi.org/10.1016/j.respol.2012.04.017
Beyer M, Czarnitzki D, Kraft K (2012) Managerial ownership, entrenchment and innovation. Econ Innov New Technol 21:679–699. https://doi.org/10.1080/10438599.2011.639978
Block JH (2012) R&D investments in family and founder firms: an agency perspective. J Bus Ventur 27:248–265. https://doi.org/10.1016/j.jbusvent.2010.09.003
Böckel A, Hörisch J, Tenner I (2020) A systematic literature review of crowdfunding and sustainability: highlighting what really matters. Manag Rev. https://doi.org/10.1007/s11301-020-00189-3
Boyack KW, Klavans R (2010) Co-citation analysis, bibliographic coupling, and direct citation: which citation approach represents the research front most accurately? J Am Soc Inform Sci Technol 61:2389–2404. https://doi.org/10.1002/asi.21419
Brenner MS, Rushton BM (1989) Sales growth and R&D in the chemical industry. Res Technol Manag 32:8–15
Cainelli G, Evangelista R, Savona M (2006) Innovation and economic performance in services: a firm-level analysis. Camb J Econ 30:435–458. https://doi.org/10.1093/cje/bei067
Chan LK, Lakonishok J, Sougiannis T (2001) The stock market valuation of research and development expenditures. J Finance 56:2431–2456. https://doi.org/10.1111/0022-1082.00411
Chauvin KW, Hirschey M (1993) Advertising, R&D expenditures and the market value of the firm. Financial Manag 22:128–140. https://doi.org/10.2307/3665583
Chen Y, Vanhaverbeke W, Du J (2016) The interaction between internal R&D and different types of external knowledge sourcing: an empirical study of Chinese innovative firms. R&D Manag 46:1006–1023. https://doi.org/10.1111/radm.12162
Chiesa V, Frattini F, Lazzarotti V, Manzini R (2009) Performance measurement in R&D: exploring the interplay between measurement objectives, dimensions of performance and contextual factors. R&D Manag 39:487–519. https://doi.org/10.1111/j.1467-9310.2009.00554.x
Choi YR, Zahra SA, Yoshikawa T, Han BH (2015) Family ownership and R&D investment: the role of growth opportunities and business group membership. J Bus Res 68:1053–1061. https://doi.org/10.1016/j.jbusres.2014.10.007
Clausen TH (2009) Do subsidies have positive impacts on R&D and innovation activities at the firm level? Struct Chang Econ Dyn 20:239–253. https://doi.org/10.1016/j.strueco.2009.09.004
Coad A, Grassano N (2019) Firm growth and R&D investment: SVAR evidence from the world’s top R&D investors. Ind Innov 26:508–533. https://doi.org/10.1080/13662716.2018.1459295
Coad A, Rao R (2008) Innovation and firm growth in high-tech sectors: a quantile regression approach. Res Policy 37:633–648. https://doi.org/10.1016/j.respol.2008.01.003
Coad A, Rao R (2010) Firm growth and R&D expenditure. Econ Innov New Technol 19:127–145. https://doi.org/10.1080/10438590802472531
Coad A, Segarra A, Teruel M (2016) Innovation and firm growth: does firm age play a role? Res Policy 45:387–400. https://doi.org/10.1016/j.respol.2015.10.015
Coe DT, Helpman E (1995) International R&D spillovers. Eur Econ Rev 39:859–887. https://doi.org/10.1016/0014-2921(94)00100-E
Cohen DA, Dey A, Tz L (2013) Corporate governance reform and executive incentives: implications for investments and risk taking. Contemp Account Res 30:1296–1332. https://doi.org/10.1111/j.1911-3846.2012.01189.x
Cohen WM, Klepper S (1996) Firm size and the nature of innovation within industries: the case of process and product R&D. Rev Econ Stat 78:232–243. https://doi.org/10.2307/2109925
Cohen WM, Levinthal DA (1990) Absorptive capacity: a new perspective on learning and innovation. Adm Sci Q 35:128–152. https://doi.org/10.2307/2393553
Coles J, Daniel N, Naveen L (2006) Managerial incentives and risk-taking. J Financial Econ 79:431–468. https://doi.org/10.1016/j.jfineco.2004.09.004
Cuozzo B, Dumay J, Palmaccio M, Lombardi R (2017) Intellectual capital disclosure: a structured literature review. J Intellect Cap 18:9–28. https://doi.org/10.1108/JIC-10-2016-0104
Del Monte A, Papagni E (2003) R&D and the growth of firms: empirical analysis of a panel of Italian firms. Res Policy 32:1003–1014. https://doi.org/10.1016/S0048-7333(02)00107-5
Diéguez-Soto J, Manzaneque M, González-García V, Galache-Laza T (2019) A study of the moderating influence of R&D intensity on the family management-firm performance relationship: evidence from Spanish private manufacturing firms. Bus Res Q 22:105–118. https://doi.org/10.1016/j.brq.2018.08.007
Dodgson M, Gann D, Salter A (2008) The management of technological innovation: strategy and practice. Oxford University Press
Eberhart AC, Maxwell WF, Siddique AR (2004) An examination of long-term abnormal stock returns and operating performance following R&D increases. J Finance 59:623–650. https://doi.org/10.1111/j.1540-6261.2004.00644.x
Ehie IC, Olibe K (2010) The effect of R&D investment on firm value: an examination of US manufacturing and service industries. Int J Prod Econ 128:127–135. https://doi.org/10.1016/j.ijpe.2010.06.005
Fan P, Watanabe C (2006) Promoting industrial development through technology policy: lessons from Japan and China. Technol Soc 28:303–320. https://doi.org/10.1016/j.techsoc.2006.06.002
Griliches Z (1981) Market value, R&D, and patents. Econ Lett 7:183–187. https://doi.org/10.1016/0165-1765(87)90114-5
Griliches Z (1987) R&D and productivity: measurement issues and econometric results. Science 237:31–35. https://doi.org/10.1126/science.237.4810.31
Griliches Z (1990) Patent statistics as economic indicators. J Econ Lit 28:1661–1707. https://doi.org/10.3386/w3301
Griliches Z, Mairesse J (2007) Productivity growth in Japan and the United States. In: Hulten C (ed) R&D and productivity growth: comparing Japanese and U.S. manufacturing firms. University of Chicago, Chicago, pp 317–348
Guan J, Zuo K, Chen K, Yam RC (2016) Does country-level R&D efficiency benefit from the collaboration network structure? Res Policy 45:770–784. https://doi.org/10.1016/j.respol.2016.01.003
Hall BH (1993) The stock market’s valuation of R&D investment during the 1980’s. Am Econ Rev 83:259–264
Hall BH, Griliches Z, Hausman JA (1986) Patents and R and D: is there a lag? Int Econ Rev 27:265–283. https://doi.org/10.2307/2526504
Hall BH, Mairesse J (1995) Exploring the relationship between R&D and productivity in French manufacturing firms. J Econ 65:263–293. https://doi.org/10.1016/0304-4076(94)01604-X
Hall RE, Jones CI (1999) Why do some countries produce so much more output per worker than others? Q J Econ 114:83–116. https://doi.org/10.1162/003355399555954
Harhoff D (1998) R&D and productivity in German manufacturing firms. Econ Innov New Technol 6:29–50. https://doi.org/10.1080/10438599800000012
Hitt MA, Hoskisson RE, Kim H (1997) International diversification: effects on innovation and firm performance in product-diversified firms. Acad Manag J 40:767–798. https://doi.org/10.5465/256948
Huang X, Hu Z, Liu C, Yu D, Yu L (2016) The relationships between regulatory and customer pressure, green organizational responses, and green innovation performance. J Clean Prod 112:3423–3433. https://doi.org/10.1016/j.jclepro.2015.10.106
Hurtado-Torres NE, Aragón-Correa JA, Ortiz-de-Mandojana N (2018) How does R&D internationalization in multinational firms affect their innovative performance? The moderating role of international collaboration in the energy industry. Int Bus Rev 27:514–527. https://doi.org/10.1016/j.ibusrev.2017.10.003
Ito K, Rose EL (1999) Innovations and geographic focus. Int Bus Rev 8:55–74. https://doi.org/10.1016/S0969-5931(98)00038-9
Jiang Z, Wang Z, Li Z (2018) The effect of mandatory environmental regulation on innovation performance: evidence from China. J Clean Prod 203:482–491. https://doi.org/10.1016/j.jclepro.2018.08.078
Kancs A, Siliverstovs B (2016) R&D and non-linear productivity growth. Res Policy 45:634–646. https://doi.org/10.1016/j.respol.2015.12.001
Kulatunga U, Amaratunga D, Haigh R (2009) Critical success factors of construction research and development. Constr Manag Econ 27:891–900. https://doi.org/10.1080/01446190903186152
Lantz JS, Sahut JM (2006) R&D investment and the financial performance of technological firms. Int J Bus 10:251–270
Lazzarotti V, Manzini R, Mari L (2011) A model for R&D performance measurement. Int J Prod Econ 134:212–223. https://doi.org/10.1016/j.ijpe.2011.06.018
Lee J, Shim E (1995) Moderating effects of R&D on corporate growth in U.S. and Japanese hi-tech industries: an empirical study. J High Technol Manag Res 6:179–191. https://doi.org/10.1016/1047-8310(95)90013-6
Lee M, Choi M (2015) Analysis on time-lag effect of research and development investment in the pharmaceutical industry in Korea. Osong Pub Health Res Perspect 6:241–248. https://doi.org/10.1016/j.phrp.2015.07.001
Lee S (2018) Growth, profits and R&D investment. Econ Res Ekonomska Istraživanja 31:607–625. https://doi.org/10.1080/1331677X.2018.1432380
Liang Q, Li X, Yang X, Lin D, Zheng D (2013) How does family involvement affect innovation in China? Asia Pac J Manag 30:677–695. https://doi.org/10.1007/s10490-012-9320-x
Lome O, Heggeseth AG, Moen Ø (2016) The effect of R&D on performance: do R&D-intensive firms handle a financial crisis better? J High Technol Manag Res 27:65–77. https://doi.org/10.1016/j.hitech.2016.04.006
Luan CJ, Tien C, Chen WL (2016) Which “green” is better? An empirical study of the impact of green activities on firm performance. Asia Pac Manag Rev 21:102–110. https://doi.org/10.1016/j.apmrv.2015.12.001
Morbey GK (1988) R&D: its relationship to company performance. J Prod Innov Manag 5:191–200. https://doi.org/10.1111/1540-5885.530191
Morbey GK, Reithner RM (1990) How R&D affects sales growth, productivity and profitability. Res Technol Manag 33:11–14
Narula R (2001) Choosing between internal and non-internal R&D activities: some technological and economic factors. Technol Anal Strateg Manag 13:365–387. https://doi.org/10.1080/09537320120088183
Nelson RR, Winter SG (1982) The Schumpeterian tradeoff revisited. Am Econ Rev 72:114–132
Nunes PM, Serrasqueiro Z, Leitão J (2012) Is there a linear relationship between R&D intensity and growth? Empirical evidence of non-high-tech vs. high-tech SMEs. Res Policy 41:36–53. https://doi.org/10.1016/j.respol.2011.08.011
Pakes A, Griliches Z (1980) Patents and R&D at the firm level: a first report. Econ Lett 5:377–381. https://doi.org/10.1016/0165-1765(80)90136-6
Pavitt K (1982) R&D, patenting and innovative activities. Res Policy 11:33–51. https://doi.org/10.1016/0048-7333(82)90005-1
Pavitt K (1984) Sectoral patterns of technical change: towards a taxonomy and a theory. Res Policy 13:343–373. https://doi.org/10.1016/0048-7333(84)90018-0
Ravenscraft D, Scherer FM (1982) The lag structure of returns to research and development. Appl Econ 14:603–620. https://doi.org/10.1080/00036848200000036
Romer PM (1990) Endogenous technological change. J Political Econ 98:S71–S102. https://doi.org/10.1086/261725
Sánchez AM, Pérez MP (2002) R&D project efficiency management in the Spanish industry. Int J Proj Manag 20:545–560. https://doi.org/10.1016/S0263-7863(01)00024-2
Scherer FM (1982) Demand-pull and technological invention: Schmookler revisted. J Ind Econ 30:225–237. https://doi.org/10.2307/2098216
Schimke A, Brenner T (2014) The role of R&D investments in highly R&D-based firms. Stud Econ Finance 31:3–45
Schumpeter JA (1934) Theory of economic development: an inquiry into profits, capital, interest and the business cycle. Harvard University Press, Cambridge, MA
Sciascia S, Nordqvist M, Mazzola P, De Massis A (2015) Family ownership and R&D intensity in small- and medium-sized firms: family ownership and R&D in SMEs. J Prod Innov Manag 32:349–360. https://doi.org/10.1111/jpim.12204
Shen CH, Zhang H (2013) CEO risk incentives and firm performance following R&D increases. J Bank Finance 37:1176–1194. https://doi.org/10.1016/j.jbankfin.2012.11.018
Teirlinck P (2017) Configurations of strategic R&D decisions and financial performance in small-sized and medium-sized firms. J Bus Res 74:55–65. https://doi.org/10.1016/j.jbusres.2017.01.008
Teirlinck P, Spithoven A (2013) Research collaboration and R&D outsourcing: different R&D personnel requirements in SMEs. Technovation 33:142–153. https://doi.org/10.1016/j.technovation.2012.11.005
Trachuk A, Linder N (2018) Innovation and performance: an empirical study of Russian industrial companies. Int J Innov Technol Manag 15:1850027. https://doi.org/10.1142/S021987701850027X
Verspagen B (1995) R&D and productivity: a broad cross-section cross-country look. J Prod Anal 6:117–135. https://doi.org/10.1007/BF01073407
Vrontis D, Christofi M (2019) R&D internationalization and innovation: a systematic review, integrative framework and future research directions. J Bus Res. https://doi.org/10.1016/j.jbusres.2019.03.031
Westhead P, Howorth C (2006) Ownership and management issues associated with family firm performance and company objectives. Fam Bus Rev 19:301–316. https://doi.org/10.1111/j.1741-6248.2006.00077.x
Yang CH, Huang CH, Hou TC (2012) Tax incentives and R&D activity: firm-level evidence from Taiwan. Res Policy 41:1578–1588. https://doi.org/10.1016/j.respol.2012.04.006
Yang KP, Chiao YC, Kuo CC (2010) The relationship between R&D investment and firm profitability under a three-stage sigmoid curve model: evidence from an emerging economy. IEEE Trans Eng Manag 57:103–117. https://doi.org/10.1109/TEM.2009.2023452
Yoo T, Sung T (2015) How outside directors facilitate corporate R&D investment? Evidence from large Korean firms. J Bus Res 68:1251–1260. https://doi.org/10.1016/j.jbusres.2014.11.005
Zahra SA (1996) Technology strategy and financial performance: examining the moderating role of the firm’s competitive environment. J Bus Ventur 11:189–219. https://doi.org/10.1016/0883-9026(96)00001-8
Zahra SA, Bogner WC (2000) Technology strategy and software new ventures’ performance. J Bus Ventur 15:135–173. https://doi.org/10.1016/S0883-9026(98)00009-3
Zahra SA, Covin JG (1994) Domestic and international competitive focus, technology strategy and company performance: an empirical analysis. Technol Anal Strateg Manag 6:39–54. https://doi.org/10.1080/09537329408524151
Zahra SA, George G (2002) Absorptive capacity: a review, reconceptualization, and extension. Acad Manag Rev 27:185–203. https://doi.org/10.5465/amr.2002.6587995
Zhu Z, Huang F (2012) The effect of R&D investment on firms’ financial performance: evidence from the Chinese listed IT firms. Mod Econ 3:915–919
Acknowledgements
The author expresses her acknowledgement to the National Research University Higher School of Economics for access to the databases needed for data collection.
Funding
This research received no external funding.
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflict of interest
The authors declare that they have no conflict of interest.
Availability of data and material
Data openly available in a public repository that issues datasets with DOIs.
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
About this article
Cite this article
Boiko, K. R&D activity and firm performance: mapping the field. Manag Rev Q 72, 1051–1087 (2022). https://doi.org/10.1007/s11301-021-00220-1
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11301-021-00220-1