Unraveling the impact of R&D investment on corporate growth: Empirical insights on intensity- and growth rate-based differences

Drini Morina, Henning Lucas and Stefanie Heiden

Finance Research Letters, 2025, vol. 74, issue C

Abstract: This paper examines intensity- and speed-based differences in the short-term relationship between R&D investment and corporate growth of over 2,000 high-tech firms from 2000 to 2020 using semiparametric quantile models. Although R&D investment is often assumed to be a candidate supporting the recovery of declining firms, a positive impact has yet only been revealed for high-growth firms. This study finds that this effect is only positive at high intensities, roughly above a 50 % R&D-to-sales ratio, and that the threshold is higher for declining firms, at about 130 %. These findings contribute to the understanding of the relationship and are valuable for managers as they consider R&D investments to enhance corporate growth.

Keywords: R&D effects; Corporate growth; Semiparametric quantile regression (search for similar items in EconPapers)
JEL-codes: G32 L25 O32 O33 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:74:y:2025:i:c:s1544612324017513

DOI: 10.1016/j.frl.2024.106722

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