The Relationship Between R&D Spending Instability and a Firm’s
Performance

D 2017

The Relationship Between R&D Spending Instability and a Firm’s Performance

JIRÁSEK, Michal

Základní údaje

Originální název

The Relationship Between R&D Spending Instability and a Firm’s Performance

Autoři

JIRÁSEK, Michal

Vydání

Reading, Proceedings of the 5th International Conference on Management, Leadership and Governance, od s. 495-502, 8 s. 2017

Nakladatel

Academic Conferences and Publishing International Limited

Další údaje

Jazyk

angličtina

Typ výsledku

Stať ve sborníku

Obor

50600 5.6 Political science

Stát vydavatele

Velká Británie a Severní Irsko

Utajení

není předmětem státního či obchodního tajemství

Forma vydání

elektronická verze "online"

Označené pro přenos do RIV

Ano

Kód RIV

RIV/00216224:14560/17:00096364

Organizační jednotka

Ekonomicko-správní fakulta

ISBN

978-1-911218-27-2

ISSN

UT WoS

000404892000061

Klíčová slova anglicky

R&D investment fluctuations; firm performance; behavioral theory of the firm; German industrials

Změněno: 17. 5. 2018 14:42, Mgr. Kateřina Oleksíková, Ph.D.

Anotace

V originále

The link between investment in innovation and subsequent change in the competitive advantage or performance of a firm is one of the most frequently studied topics with a huge importance for strategic management. The relationship has been mostly confirmed under additional influencing factors, with the form of innovation investments arguably being one of them. The research following the behavioral theory of the firm assumes that a firm adjusts its R&D spending in accordance to performance feedback. This feedback stems from the comparison of the current firm performance with its historical aspiration, historical performance and performance of firms constituting its social benchmark. When this aspiration is not attained, a firm is motivated to change which results in a change in R&D spending. A firm that is subject to this performance feedback continuously adjust its investment level—not because of changes in the research potential or deployment of a new strategy, but because of performance fluctuations, which can be caused by countless reasons, some of them outside a firm’s control. In this research, it is argued that an increased fluctuation of a firm’s R&D expense is related to a reduced financial performance. This hypothesis is tested on a sample of large German industrial firms listed on stock exchange markets followed between the years 2001 and 2015. Using fixed and random effects panel data models, the R&D instability measured by three-year and five-year standard deviations is related to financial performance levels measured by return on assets, return on equity and profit margin. Results support the proposed relationship between R&D expense instability and the subsequent financial performance of a firm. Although a causal link cannot be clearly established, the results indicate that firms with a lower financial performance have higher R&D investment fluctuations.

Návaznosti

MUNI/A/0878/2016, interní kód MU

Název: Cyklus strategické chování-výkonnost podniku a faktory jej ovlivňující

Investor: Masarykova univerzita, Cyklus strategické chování-výkonnost podniku a faktory jej ovlivňující, DO R. 2020_Kategorie A - Specifický výzkum - Studentské výzkumné projekty

Citovat

JIRÁSEK, Michal. The Relationship Between R&D Spending Instability and a Firm’s Performance. Online. In Zanele Ndaba a Thabang Mokoteli. Proceedings of the 5th International Conference on Management, Leadership and Governance. Reading: Academic Conferences and Publishing International Limited, 2017, s. 495-502. ISBN 978-1-911218-27-2.

@inproceedings{1376699,
   author = {Jirásek, Michal},
   address = {Reading},
   booktitle = {Proceedings of the 5th International Conference on Management, Leadership and Governance},
   editor = {Zanele Ndaba a Thabang Mokoteli},
   keywords = {R&D investment fluctuations; firm performance; behavioral theory of the firm; German industrials},
   howpublished = {elektronická verze "online"},
   language = {eng},
   location = {Reading},
   isbn = {978-1-911218-27-2},
   pages = {495-502},
   publisher = {Academic Conferences and Publishing International Limited},
   title = {The Relationship Between R&D Spending Instability and a Firm’s Performance},
   year = {2017}
}

TY  - CONF
ID  - 1376699
AU  - Jirásek, Michal
PY  - 2017
TI  - The Relationship Between R&D Spending Instability and a Firm’s Performance
PB  - Academic Conferences and Publishing International Limited
CY  - Reading
SN  - 9781911218272
KW  - R&D investment fluctuations
KW  - firm performance
KW  - behavioral theory of the firm
KW  - German industrials
N2  - The link between investment in innovation and subsequent change in the competitive advantage or performance of a firm is one of the most frequently studied topics with a huge importance for strategic management. The relationship has been mostly confirmed under additional influencing factors, with the form of innovation investments arguably being one of them. The research following the behavioral theory of the firm assumes that a firm adjusts its R&D spending in accordance to performance feedback. This feedback stems from the comparison of the current firm performance with its historical aspiration, historical performance and performance of firms constituting its social benchmark. When this aspiration is not attained, a firm is motivated to change which results in a change in R&D spending. A firm that is subject to this performance feedback continuously adjust its investment level—not because of changes in the research potential or deployment of a new strategy, but because of performance fluctuations, which can be caused by countless reasons, some of them outside a firm’s control. In this research, it is argued that an increased fluctuation of a firm’s R&D expense is related to a reduced financial performance. This hypothesis is tested on a sample of large German industrial firms listed on stock exchange markets followed between the years 2001 and 2015. Using fixed and random effects panel data models, the R&D instability measured by three-year and five-year standard deviations is related to financial performance levels measured by return on assets, return on equity and profit margin. Results support the proposed relationship between R&D expense instability and the subsequent financial performance of a firm. Although a causal link cannot be clearly established, the results indicate that firms with a lower financial performance have higher R&D investment fluctuations.
ER  -

JIRÁSEK, Michal. The Relationship Between R\&{}D Spending Instability and a Firm’s Performance. Online. In Zanele Ndaba a Thabang Mokoteli. \textit{Proceedings of the 5th International Conference on Management, Leadership and Governance}. Reading: Academic Conferences and Publishing International Limited, 2017, s.~495-502. ISBN~978-1-911218-27-2.

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