R&D, Advertising and Firms’ Financial Performance in South Korea: Does Firm Size Matter?

Jian Xu, Feng Liu and You-hua Chen
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Jian Xu: School of Management, Qingdao Agricultural University, Qingdao 266109, China
Feng Liu: Korea University Business School, Korea University, Seoul 02841, Korea
You-hua Chen: College of Economics & Management, South China Agricultural University, Guangzhou 510642, China

Sustainability, 2019, vol. 11, issue 14, 1-16

Abstract: Advertising and research and development (R&D) are two engines for firms to obtain competitiveness and improve profits. This study develops a system of equations to investigate the overall relationships among R&D, advertising and financial performance across firm sizes. Data from Korean listed firms have been used during 2012–2016. First, our results show that R&D and advertising are complementary in South Korea. Second, for large firms, advertising is positively and significantly associated with financial performance, and the R&D expenditure has no significant influence. Finally, R&D and advertising expenditures have a negative impact on the financial performance of small firms. An additional analysis is conducted to examine the duration of R&D and advertising. Our results from Korean listed firms contain important implications for academia as well as practitioners.

Keywords: R&D expenditure; advertising expenditure; financial performance; firm size (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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