Decision making under uncertainty? R&D activity and market value during financial crisis

Christos Sofronas, Fragiskos Archontakis and Palie Smart

European Journal of Innovation Management, 2019, vol. 23, issue 3, 383-401

Abstract: Purpose - In the research & development (R&D) and innovation management literature, the question of whether or not to perform research in the private sector is always a pertinent one. Several studies have used market value to measure its association with a firm’s R&D performance. Nevertheless, in Europe there have been considerably less studies as compared to the USA because the analysis is complicated by data issues and different country-specific laws. The purpose of this paper is to further advance this field of research. The study provides insights into the strategic decision behind conducting R&D. Design/methodology/approach - The econometric analysis is based on a unique panel data set of 133 companies in 13 European countries which is collected from the Bloomberg database covering the time period from 2002 to 2012. Findings - The empirical findings are as follows: there is weak evidence in support of the hypothesis that R&D expenditure positively affects the firm’s market value, a fact which is confirmed by other published works; there is weak evidence that economic events can disrupt the connection of R&D programs with the market value of firms; and for a highly controversial topic in the literature, data suggest that small firms are rather favoured more from R&D expenditure than large firms. Originality/value - The current study expands the discussion regarding the effect of R&D on the market value of firms via empirical evidence, within the specific environment of the European financial crisis. Future managerial, informed-based, decisions can be drawn on the present results.

Keywords: Innovation; R; D (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:ejimpp:ejim-05-2018-0103

DOI: 10.1108/EJIM-05-2018-0103

Access Statistics for this article

European Journal of Innovation Management is currently edited by Dr Vincenzo Corvello

More articles in European Journal of Innovation Management from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().