The Different Effects of Firm Resources on Firm Performance under Volatility: An Examination Using Big Data

Xuelian Piao, MyeongCheol Choi and Lele Qin

Discrete Dynamics in Nature and Society, 2022, vol. 2022, 1-14

Abstract: According to the resource-based view, research and development (R&D) and advertising are critical resources firms use to improve their performance. This study aims to clarify the different effects of R&D and advertising on firm performance using distinct criteria—firm value and firm profitability. It also verifies whether the effects of R&D and advertising apply in a volatile environment. We run panel data regression models with a big data sample of manufacturing firms publicly listed on the Korea Composite Stock Price Index over an extended period of 27 years. We find that R&D has more positive effects on firm value than advertising, while advertising has more positive effects on firm profitability than R&D; these relationships are consistent even when volatility is considered. This suggests that firms should mix and match their investments between R&D and advertising resources for improved effectiveness and efficiency, and these resources should be accumulated and exploited consistently regardless of environmental dynamics.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:hin:jnddns:6151667

DOI: 10.1155/2022/6151667

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