Do Large Firms Benefit More From R&D Investment?

Oyakhilome Ibhagui

The European Journal of Applied Economics, 2019, vol. 16, issue 2, 155-173

Abstract: We examine the importance of firm size in the relationship between research & development (R&D) and firm performance. Our empirical analysis, based on data drawn from Nasdaq-listed companies for the period 2002 to 2017, shows that R&D can have effects of varying magnitudes on firm performance, depending on firm size. When R&D weakens firm performance, the negative effects are more pronounced for small-sized firms, but when the impact of R&D is positive, leading to an improvement in firm performance from increased R&D, largesized firms tend to reap most of the benefits. Accordingly, we show that firm size matters in understanding the scale of the impact of R&D on firm performance.

Keywords: research and development (R&D); firm performance; firm size (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:sng:ejae01:118

DOI: 10.5937/EJAE16-21770

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