R&D spending, strategic position and firm performance

Bing Guo (), Jing Wang () and Steven X. Wei ()
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Bing Guo: Hong Kong Polytechnic University
Jing Wang: Hong Kong Polytechnic University
Steven X. Wei: Hong Kong Polytechnic University

Frontiers of Business Research in China, 2018, vol. 12, issue 1, 1-19

Abstract: Abstract Based on R&D investment data from Chinese listed manufacturing firms, this paper examines the effect of R&D spending on firms’ future performance conditional on their strategic positions. We find that firms pursing a product differentiation strategy have more R&D spending than those with a cost leadership strategy. In addition, we document a positive effect of R&D spending on firms’ future performance if they adopt a product differentiation strategy. Meanwhile, for the firms that adopt a cost leadership strategy, the relationship between R&D spending and firm performance resembles an inversed U-shape. Furthermore, we find this inversed U-shape relationship only exists for non-state-owned firms. Overall, this paper provides guidance and useful suggestions on the efficient allocation of R&D resources for Chinese manufacturing firms.

Keywords: R&D spending; Strategic position; Firm performance (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (12)

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DOI: 10.1186/s11782-018-0037-7

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