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Corporate Performance and Technological Change Through Investors' Eyes
Abstract
OVERVIEW : A McKinsey & Company study of corporate performance reveals that even the best-run and most widely admired companies have been unable to sustain their market-beating performance over the long term. Eight key insights from this study of more than 2,500 companies are discussed, including that R&D spending does not correlate with shareholder returns in any simple way. R&D leaders should learn from this that while there may be periods when companies and industries display extraordinary performance, these periods always end. R&D management - who are at the very center of creation - must look hard at spending, particularly when others are cutting back. Many of today's industry leaders actually increased their R&D spending during the 1990-91 recession.
... Eberhart et al. (2004) found that companies, after five years of increasing their R&D, experienced significantly positive operating performance on the one hand; on the other, their shareholders also experienced significantly positive stock returns. Foster (2003) recognised a positive relationship between R&D strategy and business performance. He noted, for example, that increasing investment in R&D during a recession might lead to subsequent strong business performance. ...
... In contrast, some firms established a more aggressive strategy in response to crises. There is much empirical evidence, and many cases showed that the increasing R&D investment shows positive results to performance during recessions (Covin and Slevin, 1989;Dugal and Graham, 1995;Foster, 2003). For example, Samsung Electronics succeeded in expanding its market share in the semiconductor industry, from 6.8% in 2008 to 9.7% in 2011, by focusing on high value products through large-scale R&D investment. ...
There has been a lot of interest in R&D dynamics, including the persistency and volatility of R&D investment. However, there is a lack of empirical evidence supporting the impact of R&D dynamics on firm growth in the context of an economic crisis. This study examines the effects of R&D dynamics on firm growth during and after the global financial crisis of 2008–2009. Based on firm-level data, we construct a balanced panel for 1,137 firms in the global petrochemical industry. Our findings indicate that firms with R&D persistency show higher growth during and after the crisis, regardless of firm size. R&D persistency has a higher impact on firm growth in large firms than in smaller ones. In addition, R&D persistency has greater influence than the level of R&D investment. Firms should pursue non-cyclical and consistent R&D strategies with a long-term perspective, especially in high uncertainty conditions.
... , Eberhart et al..(2004), Foster(2003), Tubbs(2007) 등이 있는 반면 성과가 없거나 음의 관계가 있다는 연구들은 Drake & Jonash(2006), Jaruzelsk et al.(2005Jaruzelsk et al.( , 2006, Morbey & Reithner(1990) (Hirschey & Weygandt, 1985;Hall, 1993;Kim, 2007), 누적초과 수익률(Bublitz & ettredge, 1989;Chauvin & Hirschey, 1993;Jung et al., 2005), 주가 (Chan et al., 1990;Lev & Sougainnis, 1996;Jung et al., 2005) Probability of significance (both sides) .046 ...
Purpose In recent years, competition among companies has become more and more important to maximize the competitiveness of companies by improving their productivity through technological innovation. Increasing competitiveness through technological innovation is becoming an essential requirement for survival of companies. In order for companies to innovate, it is necessary to spend R&D investment and the government is strengthening various policy supports to do this. Athletic equipment industry classified as manufacturing industry in sports industry. In this study, considering the fact that manufacturing industry occupies a large part of Korea's R&D investment, we compared R&D intensities with athletic equipment industry and other industries. We also examined whether R&D investment has affected firm performance. Methods The data used in the analysis were extracted from KIS-DATA with KSIC codes of companies classified as sports and athletic goods manufacturing industry in the 9th Korean Standard Industrial Classification of National Statistical Office. The analysis period is five years from 2011 to 2015 to look at the current status. Looking at the number of companies extracted by year, it was 42 in 2011, 45 in 2012, 46 in 2013, 48 in 2014, and 39 in 2015. Results Research showed that the intensity of R&D of athletic equipment industry was 1.22% in 2011, 1.63% in 2012, 1.51% in 2013, 1.53% in 2014 and 1.30% in 2015. This was lower than the manufacturing industry, which was a category of athletic equipment industry, and lower than that of similar small and medium sized enterprises. The correlation between R&D intensities and the sales growth rate of firms showed a positive correlation in 2011 and 2015, but the correlation is not strong. Conclusion R&D investment in athletic equipment industry was not actively taking place, and R&D investment did not have a significant effect on the performance of the company.
... 이러한 기술혁신활동의 주요 요인으로는 기술혁신을 위 한 연구개발 투자와 (Solow, 1997), 특허보유가 있다 (Griliches, 1990). 연구개발 투자의 증대는 개발성과를 높여 주어 (Hadjimanolis, 2000;Tubbs, 2007), 경쟁사에 비해 높은 개발성과를 보여 주며 (Foster, 2003), 신제품의 개발성공률을 높여준다 (Freel, 2003). 또 한 연구개발 투자의 증대는 특허성과를 높이고 있으며 (Griliches, 1990), 연구개발투자, 특허성과는 개발성과를 높여준다 (Schoenecker and Swanson, 2002 (Song and Parry, 1997b), 제품의 품질이 우수한 경우 성과가 높았다 (Urban et al., 1986;Lambkin, 1988). ...
In This Study, New Product Development Activities, Innovation Activities, Technical Cooperation Activities may have an Impact on Competitive Advantage, Development Performance and Business Performance. The aim of Empirical Analyze is to identify the Structural Causal Relationship among the Activities and Performance Factors. We get the Results as Follows : New Product Development Activities have a Positive Impact on Competitive Advantage as well as the Development Performance. Technological Innovation Activities have a Positive Impact on Competitive Advantage, and do not have enough Impact on the Development Performance. Technical Cooperation Activities have a Positive Impact on the Development Performance, and do not have enough Impact on the Competitive Advantage, Competitive Advantage has a Positive Impact on the Development Performance as well as the Business Performance. Development Performance has a Positive Impact on the Business Performance.
The financial performance of each type of innovation certification was compared and analyzed from the perspective of growth potential, profitability, and stability for SMEs that maintained innovation certification in 2016-2020. Through this, the impact of maintaining innovativeness on financial performance was reflected, and policy implications for each innovation certification were derived accordingly. First, from the perspective of growth potential, it is necessary to support inno-biz certified SMEs and main-biz certified SMEs to maintain and discover growth engines. Second, from the perspective of profitability, main-biz certified SMEs need to drive profitability through improvement of business feasibility in terms of follow-up management. Third, from the viewpoint of stability, the debt ratio itself for venture certified SMEs and main-biz certified SMEs is not a level of concern. However, it is necessary to support measures to strengthen financial soundness at an early stage in terms of follow-up management. Fourth, there is a difference in the fundamental composition of the technology innovation-type certification and the management innovation-type certification. Therefore, it was concluded that it is necessary to maximize the effectiveness of the certification system by applying improvement measures for each
innovation certification and strengthening the re-certification process rather than integrating and closing between innovation certifications.
Este trabalho trata das inovações do design e investiga um modelo de inovação que se proponha à refletir sobre a prática da sustentabilidade no móvel doméstico. Coloca como objeto de estudo o home office, que é ambientado em um novo contexto econômico e social.
To analyze the effects of R&D expenditure on the firm value of Korean firms, we classified portfolios based on R&D activity levels. After that, we conducted a time-series analysis to assess excess returns from the portfolios. To carry out such an analysis, an empirical analysis of excess returns in the capital market was performed by using the monthly earning rate of stocks from 2000 to 2013. The purpose of this research is to provide basic data on investment to stakeholders in the capital market by analyzing the effects of R&D on the firm value and to overcome scholarly limitations by offering a new model of analysis. The criteria for classifying the portfolios were based on R&D expenditure levels. The analysis models follow the Fama-French Three-Factor Model and the Carhart Four-Factor Model. The analyses results are as follows. Extrapolating monthly profit rates based on R&D expenditure levels, portfolios with low R&D expenditures showed higher earning rates than those with high R&D expenditures. This suggests that high R&D expenditures did not translate into high earning rates. The investor depreciates the R&D expenditures related profitability and the possibility of success in the market, leading to falls in stock prices and a failure to give a positive effect on the firm value. Our research differs from the previous investigations as we carried out an empirical analysis based on the actual investors` attitudes about R&D expenditures and how these can generate excess earnings. Our research results show that the data related to R&D expenditure are not reflected fully in the market.
Recently, interest in research and development (R&D) investment decisions have increased among Korean domestic enterprises. However, existing R&D investment studies only focused on government R&D investment policies while only a few studies investigated firm level R&D investment. Prior literatures also overlooked the feedback loop between R&D investment and firm performance. Therefore, this paper identifies a system dynamics model for R&D investment decision making in domestic electronics firms. The conceptual model is derived from R&D investment-related theories found in bodies of literature on company performance, enterprise activity, and market maturity. This study investigates the dynamic feedback between R&D activities and sales using the system dynamics model. In other words, the system dynamics model is used to explain the change in the closed feedback circulation structure in R&D investment activities including technology development, production process, and marketing that subsequently result in sales increase and re-investment into R&D from the generated revenues. There are two major results. First, a similar ratio of investment on technology development and production process derives the higher company sales. Second, regardless of market maturity, marketing investment ratio positively affects sales and R&D budget growth. This study provides a system dynamics model to find the optimal ratio for R&D investment and suggests managerial strategic implications on electronic firm R&D investment decision making under market maturity condition.
The annual R&D Trends Forecast for companies conducting the US-based R&D looks favorable despite high fuel costs. The total company R&D expenditures is expected to increase, though it may not be keeping in pace fully with revenue growth. Of the member companies responding, 25% expect their R&D intensity to decrease and 57% expect it to remain flat for the year 2006. Investments in the latest business projects continue to accelerate, which seems to be the expense of R&D 'support of existing business'. The 2006 forecast continues to show more companies willing to make larger overhead commitments by increasing the 'R&D personnel level' and 'hiring latest graduates'.
This research aims to investigate the effect of research and development (R&D) investment on firm performance contingent on desorptive capacity (DC). The structural equation model was used to examine the mediating, independent, moderating, and spurious effects of DC. The empirical results showed that Korean firms’ R&D investment has a positive impact on the firm performance. DC was also found to be a significant variable, which moderates the relation between R&D investment and firm performance. Thus, this study concludes that the increase in R&D investment alone is not sufficient to improve the firm performance which in turn highlights the complementary role of desorptive capacity.
This study aims at investigating empirical relationships among technology management capability(TMC), technology commercialization(TC), and technology acquisition strategy(TAS) in SMEs. First, this study identifies the empirical effects of TMC on TC. Second, this study also identifies whether TAS contributes to increasing the effect of TMC on TC or not. The analyses of the data showed TMC was positively related to TC. Second, when technology acquisition strategies were high, the relationships between TMC and TC were highly related.
A new generation of innovation management that incorporates a new generation of R &D management is a key requirement for managing radical innovation. Effective innovation management requires a spiral stage-gate process for radical innovation and a linear one for incremental innovation. The spiral process for radical innovation management combines models for technology, capabilities, markets, value chains, and businesses. Innovation process focuses on capability development, where capability is people processing knowledge, tools, technology, and process. Innovation is ruled by the product, process, people, and politics that support radical innovation.
In recent decades, studies on the performance of investment in research and development (R&D) have received more attention. This paper aims to identify the cause-and-effect relationships among R&D investment, R&D capability, financial performance, and company market value for companies in different life cycle stages. From the empirical findings, there is a basic difference across stages, specifically on the mediating role of financial performance. In spite of this difference, there are also important similarities across the three stages. That is, four of the five paths are significant and are in the hypothesized direction for the three stages: (1) the effect of R&D investment on financial performance, (2) the effect of R&D investment on R&D capability, (3) the effect of R&D capability on financial performance, and (4) the effect of R&D capability on company market value.
In setting R&D budgets, many companies compare their R&D intensity with that of the average intensity for global companies in their sector using an R&D scoreboard. However, it's important to define the sector or subsector for this purpose carefully since unduly broad sector definitions have led to misleading conclusions. Moreover, R&D is only one of the investments that should be compared in this way—both Capex and market development can be as or more important for some sectors. Competitive advantage can also be gained by increasing R&D at the start of a recession or downturn when competitors may be decreasing R&D a number of companies have shown that this boosts the relative advantage of the company's products and services and hence leads to increased sales and market capitalization in the subsequent upturn.
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