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R&D, Advertising and Firms’ Financial Performance in South Korea: Does Firm Size Matter?

Author

Listed:
  • Jian Xu

    (School of Management, Qingdao Agricultural University, Qingdao 266109, China)

  • Feng Liu

    (Korea University Business School, Korea University, Seoul 02841, Korea)

  • You-hua Chen

    (College of Economics & Management, South China Agricultural University, Guangzhou 510642, China)

Abstract

Advertising and research and development (R&D) are two engines for firms to obtain competitiveness and improve profits. This study develops a system of equations to investigate the overall relationships among R&D, advertising and financial performance across firm sizes. Data from Korean listed firms have been used during 2012–2016. First, our results show that R&D and advertising are complementary in South Korea. Second, for large firms, advertising is positively and significantly associated with financial performance, and the R&D expenditure has no significant influence. Finally, R&D and advertising expenditures have a negative impact on the financial performance of small firms. An additional analysis is conducted to examine the duration of R&D and advertising. Our results from Korean listed firms contain important implications for academia as well as practitioners.

Suggested Citation

  • Jian Xu & Feng Liu & You-hua Chen, 2019. "R&D, Advertising and Firms’ Financial Performance in South Korea: Does Firm Size Matter?," Sustainability, MDPI, vol. 11(14), pages 1-16, July.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:14:p:3764-:d:247028
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    2. Qianhui Ma & Lan Ju & Zishi Zhang, 2022. "Innovation Input and Firm Value: Based on the Moderating Effect of Internal Control," Sustainability, MDPI, vol. 14(18), pages 1-24, September.

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