Determinants and persistence of research and development investments

Radiah Othman and Rashid Ameer

International Journal of Emerging Markets, 2009, vol. 4, issue 3, 275-292

Abstract: Purpose - The purpose of this paper is to investigate the determinants and persistence of research and development (R&D) investments in Malaysia. Design/methodology/approach - The approach involves a regression analysis. Findings - The regression analysis shows that lagged absorbed slack defined as the ratio of selling and administrative expenses to total sales and sales growth have positive affect on the R&D expenses, whereas diversification has negative impact on R&D expenses after controlling for leverage and profitability of the firms. Persistence in the firm‐level R&D expenses is found. Occasional tendency among firms to cut down R&D spending over the period of 2000‐2005 is found. Research limitations/implications - Sample size is a limitation. Practical implications - The findings have implications for the corporate governance and innovation charter of the firms. Originality/value - The paper provides useful information from Malaysia regarding the determinants and persistence of R&D investments.

Keywords: Research and development; Chief executives; Stock options; Malaysia (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijoemp:17468800910968427

DOI: 10.1108/17468800910968427

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