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R&D Intensity and Firm Performance–Sectoral Differences

In: Management Of Technology Innovation And Value Creation Selected Papers from the 16th International Conference on Management of Technology

Author

Listed:
  • Hanna Kuittinen

    (Lappeenranta University of Technology, School of Business, P.O. Box 20, Lappeenranta, FIN-53851, Finland)

  • Kaisu Puumalainen

    (Lappeenranta University of Technology, School of Business, P.O. Box 20, Lappeenranta, FIN-53851, Finland)

  • Ari Jantunen

    (Lappeenranta University of Technology, School of Business, P.O. Box 20, Lappeenranta, FIN-53851, Finland)

Abstract

This paper investigates the relation of research and development intensity to firm performance. We believe that this relation is strongly sector-related, as the logic of innovation differs radically between different industries and apply the Pavitt taxonomy to classify different industries into more homogenous sectors. We use a large data set of public companies worldwide over the 1996–2005 period. An interesting question is the delay between an R&D investment and its results. We assume that this lag is dependent on the technological environment (technology regime, uncertainty, intensity) and hence differs between industry categories. There is also reason to believe that lag structures are different depending on the performance measure used. The effects on growth are expected to have a shorter time lag when compared to profitability measures. Our results imply that sectoral differences do exist in firm-level R&D intensity as such, with science-based industries having the highest R&D intensity. Sectoral differences are also evidential when estimating the time lag effect between R&D expenditures and performance of the firm.

Suggested Citation

  • Hanna Kuittinen & Kaisu Puumalainen & Ari Jantunen, 2008. "R&D Intensity and Firm Performance–Sectoral Differences," World Scientific Book Chapters, in: Mostafa Hashem Sherif & Tarek M Khalil (ed.), Management Of Technology Innovation And Value Creation Selected Papers from the 16th International Conference on Management of Technology, chapter 3, pages 39-53, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789812790545_0003
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