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Economic returns to industrial research

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  • Kafouros, Mario I.
Abstract
This paper investigates the relationship between R&D and corporate performance. The study extends previous research by examining the conditions under which firms benefit from R&D; by incorporating in the analysis the varying costs of R&D inputs; and by employing an opportunity-cost approach that estimates the monetary returns to R&D. The findings indicate that industrial research generates revenues that are significantly higher than the returns that other investments yield. The study also resolves previously conflicting results concerning firm size, and offers new insights on the role of technological opportunities that contradict past studies. Although the potential for innovation is greater in high-tech industries, intense R&D competition prevents technologically dynamic firms from enjoying high returns to R&D. By contrast, the results demonstrate that low-tech firms use R&D successfully as part of their strategies, implying that prior research underestimates the importance of R&D for these firms.

Suggested Citation

  • Kafouros, Mario I., 2008. "Economic returns to industrial research," Journal of Business Research, Elsevier, vol. 61(8), pages 868-876, August.
    • Handle: RePEc:eee:jbrese:v:61:y:2008:i:8:p:868-876
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    Cited by:

    1. Zouaghi, Ferdaous & Sánchez, Mercedes & Martínez, Marian García, 2018. "Did the global financial crisis impact firms' innovation performance? The role of internal and external knowledge capabilities in high and low tech industries," Technological Forecasting and Social Change, Elsevier, vol. 132(C), pages 92-104.
    2. Meyer, John & Subramaniam, Mohan, 2014. "Appropriating innovation's technical value: Examining the influence of exploration," Journal of Business Research, Elsevier, vol. 67(1), pages 2860-2866.
    3. David Devins & George Lodorfos & Ioannis Kostopoulos & Don Webber, 2017. "Innovation And Growth In The City Region: Microeconomic Evidence Of Asymmetries," World Scientific Book Chapters, in: Joe Tidd (ed.), Promoting Innovation in New Ventures and Small- and Medium-Sized Enterprises, chapter 1, pages 3-27, World Scientific Publishing Co. Pte. Ltd..
    4. Kafouros, Mario I. & Forsans, Nicolas, 2012. "The role of open innovation in emerging economies: Do companies profit from the scientific knowledge of others?," Journal of World Business, Elsevier, vol. 47(3), pages 362-370.
    5. Chowdhury, Reza H. & Maung, Min, 2012. "Financial market development and the effectiveness of R&D investment: Evidence from developed and emerging countries," Research in International Business and Finance, Elsevier, vol. 26(2), pages 258-272.
    6. Lo, Chu-Ping, 2016. "Intellectual property, research intensity, and scale effect," Journal of Business Research, Elsevier, vol. 69(6), pages 2297-2301.
    7. Moncada-Paternò-Castello, Pietro & Ciupagea, Constantin & Smith, Keith & Tübke, Alexander & Tubbs, Mike, 2010. "Does Europe perform too little corporate R&D? A comparison of EU and non-EU corporate R&D performance," Research Policy, Elsevier, vol. 39(4), pages 523-536, May.
    8. Sandra M. Leitner & Robert Stehrer, 2011. "Shapes and determinants of returns to innovation," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 20(8), pages 777-795, December.
    9. Selma Regina Martins Oliveira & Roberto Sbragia, 2015. "Modelling to assess the impact of technological innovation capacity in the performance of high complexity environments," International Journal of Business Performance and Supply Chain Modelling, Inderscience Enterprises Ltd, vol. 7(1), pages 12-35.
    10. Pietro Moncada-Paternò-Castello & Peter Voigt, 2010. "Proceedings of CONCORD 2010: 2nd European Conference on Corporate R&D "An Engine for Growth, a Challenge for European Policy". Academic Forum - Summary Report," JRC Research Reports JRC60863, Joint Research Centre.
    11. Wang, David Han-Min & Yu, Tiffany Hui-Kuang & Liu, Hong-Quan, 2013. "Heterogeneous effect of high-tech industrial R&D spending on economic growth," Journal of Business Research, Elsevier, vol. 66(10), pages 1990-1993.
    12. Wang, Chengqi & Kafouros, Mario I., 2009. "What factors determine innovation performance in emerging economies? Evidence from China," International Business Review, Elsevier, vol. 18(6), pages 606-616, December.

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