Volume 30, Issue 1, 2021
DOI: 10.24205/03276716.2020.2021
Long-term Effects of Research and Development on Firm Performance - Taking Taiwan as the Example (2001-2017)
Abstract
Previous researches made by scholars on R&D expenses have shown that firm performance can be better with more R&D investment. However, some scholars have expressed that R&D investment has negative effects on firm performance. Therefore, this research explored the causes of positive and negative results. The listed surviving firms (excluding financial firms) of Taiwan, a developed country, between 2001 and 2017 were taken as the research samples, and totally 15,708 samples of 924 enterprises were deleted due to incomplete data. From the research results, the benefits of R&D activities were found to have the time lag effect, which shows why scholars in the past believed that R&D investment has both positive and negative effects. Furthermore, from the research results, R&D investment in the first year has negative effects on firm performance (Tobin's Q). R&D expenses have no significant effects on firm performance in the following four years and do not appear until the fifth year, but continue until the ninth year and above.
Keywords
R&D expenses; Firm performance; Panel data