Does R&D really drive competitive advantage and performance?

Nicholas O'Regan, Martin A. Sims and Abby Ghobadian

International Journal of Manufacturing Technology and Management, 2008, vol. 15, issue 3/4, 376-403

Abstract: Recent research has shown that Research and Development (R&D) has a significant impact on performance in manufacturing small- and medium- sized firms. However, corporate performance is often hampered by a failure to effectively convert R&D into innovation, leading to a negative impact on both growth and quality and consequently corporate performance. This paper develops and tests a methodology using a number of characteristic footprints to represent the R&D, innovation, growth and quality variables and their overall impact on corporate performance. This paper also uses a new approach to multivariate analysis based on the conditional formatting of spreadsheets and the use of nested logical operators for complex comprehension, as well as established statistical techniques. The findings indicate that R&D expenditure impacts positively on both innovation and growth and is therefore an important driver for enhanced financial performance. The results of this study indicate significant links between R&D, innovation and growth. Each link is underpinned by quality attributes. These findings should assist SMEs to navigate the often risky, complicated and time consuming route from R&D to enhanced financial performance.

Keywords: research and development; R&D expenditure; innovation; quality; corporate performance; competitive advantage; SMEs; small and medium-sized enterprises; financial performance. (search for similar items in EconPapers)
Date: 2008
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