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Do investments in research and development translate to sales?

Author

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  • Ibrahim Iskin
  • Tugrul U. Daim
  • Adriana Cutar

Abstract

Many emphasise vital importance of investing in research and development (R&D) in order to develop key competencies. However, recent events in 2009 showed us even giant firms listed among the top R&D spenders can suffer serious consequences caused by economic downturn. This paper investigates significance of R&D efforts over business growth over time based on the data gathered from companies listed as top R&D spenders between years 2001 and 2006. Annual R&D expenditure and annual R&D expenditure per employee metrics have been used as indicators of R&D efforts where as annual sales revenue data has been used for measuring business growth. Implications of this study provide insights about the relationship between building and exploiting technological capabilities. For instance, findings show that business growth is not a function of an individual organisation's R&D investments only, but a function of its relative amount of investments compared to its competitors. It has also been observed that relationship between R&D efforts and business growth in different industries cannot be generalised due to each one having unique dynamics. However, same generalisation has been found to exist among different regions, although each of them has different research policies.

Suggested Citation

  • Ibrahim Iskin & Tugrul U. Daim & Adriana Cutar, 2011. "Do investments in research and development translate to sales?," International Journal of Business Innovation and Research, Inderscience Enterprises Ltd, vol. 5(5), pages 510-525.
    • Handle: RePEc:ids:ijbire:v:5:y:2011:i:5:p:510-525
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