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Business Unit Strategy and Changes in the Product R&D Budget

Author

Listed:
  • Donald C. Hambrick

    (Columbia University)

  • Ian C. MacMillan

    (Columbia University)

  • Ricardo R. Barbosa

    (Columbia University)

Abstract

This study of changes in Product R&D intensity in business units supplements past studies by including two major classes of independent variables which have not been examined previously: the competitive strategy of the business and role of the business in the overall corporate portfolio. Multiple regression analysis is used on a sample drawn from the PIMS data base. The results suggest that R&D decisions in growth businesses are responsive to competition, evolving strategies, and intra-firm resource flows. In mature businesses, a pattern of stability and R&D equilibrium is evident, even in the face of changes by competitors. Managerial implications are noted.

Suggested Citation

  • Donald C. Hambrick & Ian C. MacMillan & Ricardo R. Barbosa, 1983. "Business Unit Strategy and Changes in the Product R&D Budget," Management Science, INFORMS, vol. 29(7), pages 757-769, July.
    • Handle: RePEc:inm:ormnsc:v:29:y:1983:i:7:p:757-769
    DOI: 10.1287/mnsc.29.7.757
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    Cited by:

    1. Guoli Chen & Craig Crossland & Shuqing Luo, 2015. "Making the same mistake all over again: CEO overconfidence and corporate resistance to corrective feedback," Strategic Management Journal, Wiley Blackwell, vol. 36(10), pages 1513-1535, October.
    2. Scott A. Shane & Karl T. Ulrich, 2004. "50th Anniversary Article: Technological Innovation, Product Development, and Entrepreneurship in Management Science," Management Science, INFORMS, vol. 50(2), pages 133-144, February.
    3. Sergio Sánchez Ramírez & Fátima Guadamillas Gómez & Mª Isabel González Ramos & Olga Grieva, 2022. "The Effect of Digitalization on Innovation Capabilities through the Lenses of the Knowledge Management Strategy," Administrative Sciences, MDPI, vol. 12(4), pages 1-18, October.
    4. Ponta, Linda & Puliga, Gloria & Lazzarotti, Valentina & Manzini, Raffaella & Cincotti, Silvano, 2023. "To copatent or not to copatent: An agent-based model for firms facing this dilemma," European Journal of Operational Research, Elsevier, vol. 306(3), pages 1349-1363.
    5. Kim, Hyung-Tae & Lee, Seungwon & Park, Sung-Jin & Lee, Brandon, 2019. "Audit fees and corporate innovation: Auditors' response to corporate innovation," MPRA Paper 101081, University Library of Munich, Germany.
    6. Cho, Sam Yul & Kim, Sang Kyun, 2017. "Horizon problem and firm innovation: The influence of CEO career horizon, exploitation and exploration on breakthrough innovations," Research Policy, Elsevier, vol. 46(10), pages 1801-1809.
    7. Mariadoss, Babu John & Johnson, Jean L. & Martin, Kelly D., 2014. "Strategic intent and performance: The role of resource allocation decisions," Journal of Business Research, Elsevier, vol. 67(11), pages 2393-2402.
    8. David Aboody & Shai Levi & Dan Weiss, 2018. "Managerial incentives, options, and cost-structure choices," Review of Accounting Studies, Springer, vol. 23(2), pages 422-451, June.
    9. Shaker A. Zahra, 1994. "New Product Innovation in Established Companies: Associations with Industry and Strategy Variables," Entrepreneurship Theory and Practice, , vol. 18(2), pages 47-69, January.
    10. Kim, Bongsun & Kim, Eonsoo & Miller, Douglas J. & Mahoney, Joseph T., 2016. "The impact of the timing of patents on innovation performance," Research Policy, Elsevier, vol. 45(4), pages 914-928.
    11. Dirk Engel & Verena Eckl & Michael Rothgang, 2019. "R&D funding and private R&D: empirical evidence on the impact of the leading-edge cluster competition," The Journal of Technology Transfer, Springer, vol. 44(6), pages 1720-1743, December.
    12. Xiang, Erwei & Gasbarro, Dominic & Cullen, Grant & Ruan, Wenjuan, 2020. "Does R&D expenditure volatility affect stock return?," Journal of Contemporary Accounting and Economics, Elsevier, vol. 16(3).
    13. Supachart Iamratanakul, 2013. "The Selection of Project in Rapid Environment’s Industry Using Zero Based Budget," Diversity, Technology, and Innovation for Operational Competitiveness: Proceedings of the 2013 International Conference on Technology Innovation and Industrial Management,, ToKnowPress.
    14. Saura, M. D. & Gómez-Mejía, Luis R., 1996. "The linkages between business strategies and compensation policies using miles and snow's framework," DEE - Working Papers. Business Economics. WB 7055, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.

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