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Impact of R&D on Firm Performance: Do Ownership Structure and Product Market Competition Matter?

Author

Listed:
  • Muhammad Arif Khan
  • Meng Bin
  • Chunlin Wang
  • Hazrat Bilal
  • Arshad Ali Khan
  • Irfan Ullah
  • Amjad Iqbal
  • Mohib Ur Rahman

Abstract

This study investigates how R&D affects firm performance and examines whether and how state ownership moderates the R&D–firm performance nexus. Moreover, this study investigates whether and how product market competition moderates the association between R&D and performance across the different natures of firms. Employing a sample of Chinese listed firms from 2000 to 2020, the study performs estimations by applying pooled ordinary least squares regressions, fixed-effect panel regressions, and a two-step system GMM model to account for endogeneity problems. The findings reveal that firm performance reduces as R&D expenses rise, with the impact being less pronounced for state-owned enterprises. The adverse impact of R&D on corporate performance is also alleviated under intense competition. The results have important implications for policymakers, investors, and corporations seeking to understand how R&D spending influences corporate performance in competitive industries. JEL classification: L25, G32, O3

Suggested Citation

  • Muhammad Arif Khan & Meng Bin & Chunlin Wang & Hazrat Bilal & Arshad Ali Khan & Irfan Ullah & Amjad Iqbal & Mohib Ur Rahman, 2023. "Impact of R&D on Firm Performance: Do Ownership Structure and Product Market Competition Matter?," SAGE Open, , vol. 13(4), pages 21582440231, November.
    • Handle: RePEc:sae:sagope:v:13:y:2023:i:4:p:21582440231199560
    DOI: 10.1177/21582440231199560
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    More about this item

    Keywords

    firm performance; R&D investment; competition; SOEs; China;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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