 Understanding the complex relationship between R&D investment and firm growth: A chaos perspectiveXuchuan Yuan and Rohit Nishant Journal of Business Research, 2021, vol. 129, issue C, 666-678 Abstract: Time delays and feedback loops often introduce nonlinear, dynamic, chaotic, or disorderly business patterns. In this paper, we argue that a firm’s growth driven by R&D can also exhibit chaotic behavior, through a simple model, where R&D has two distinct impacts on its revenue through the demand-inducing and cost-increasing effects. On the basis of a revenue-based investment strategy with anchoring and adjustment, the firm’s growth dynamics are characterized by a two-dimensional dynamical system under either the cost-plus or profit-maximizing pricing policies. Theoretical and numerical studies are used to show that growth can drive stable, periodic, and even chaotic behaviors. The findings suggest that R&D investment has more complex impacts on growth than previously envisioned, and that managerial decisions about R&D investments can cause fluctuations and erratic growth patterns in nonlinear and complex business environments. Keywords: Chaos; Complex system; Firm growth; R&D investment; Revenue dynamics (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:129:y:2021:i:c:p:666-678 DOI: 10.1016/j.jbusres.2019.11.043 Access Statistics for this article Journal of Business Research is currently edited by A. G. Woodside More articles in Journal of Business Research from Elsevier |
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