Is R&D Always Beneficial?

Hsu-Ling Chang and Chi-Wei Su ()
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Hsu-Ling Chang: Department of Accounting and Information, Ling Tung University, Taichung, Taiwan
Chi-Wei Su: Department of International Trade, Tamkang University, 151 Ying-Chun Road, Tamsui, Taipei, Taiwan 25137, Taiwan

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2010, vol. 13, issue 01, 157-174

Abstract: This study sets out with the aim of determining whether there is such a thing as an optimal level of research and development (R&D) intensity within which a firm can effectively maximize its sales growth ratio. We adopt an advanced panel threshold regression model to examine the relationship between R&D intensity and the growth rate in sales based upon data on firms within the electronics industry in Taiwan. The results demonstrate that R&D intensity has a positive impact on sales growth when the level of such R&D intensity is below the threshold value, and a negative impact when the level of R&D intensity is above the threshold value.

Keywords: R&D growth; Gibrat's Law; panel unit root test; panel threshold regression model; C3; G3 (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (12)

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DOI: 10.1142/S0219091510001809

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