Firm Characteristics, Uncertainty and Research and Development (R&D) Investment: The Role of Size and Innovation Capacity

Sungmoon Jung and Gihyun Kwak
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Sungmoon Jung: Busan Institute of S&T Evaluation and Planning, 79, Centum jungang-ro, Haeundae-gu, Busan 48058, Korea
Gihyun Kwak: High-Potential Enterprises Research Institute, 4F, 279, Dongmak-ro, Mapo-Gu, Seoul 04151, Korea

Sustainability, 2018, vol. 10, issue 5, 1-14

Abstract: This paper examines the investment behavior of research and development (R&D) under uncertainty. We assume that there is a heterogeneous effect of uncertainty on R&D investment depending on characteristics of a firm. According to the results, the size and the innovation capacity of a firm are found to positively moderate the negative relationship between uncertainty and R&D investment. When the entire sample is divided into large and small-and-medium enterprises and high innovation capacity and low innovation capacity, it is found that the innovation capacity of a firm is a more crucial factor in positively moderating the negative relationship between R&D investment and uncertainty than the size of a firm. These findings provide policy implications, particularly for small-and-medium enterprises (SMEs), to promote R&D activities.

Keywords: R&; D investment; firm size; firm innovation capacity; dynamic panel data analysis (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:10:y:2018:i:5:p:1668-:d:148224

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