Les Cahiers de Recherche - HEC Paris
R&D Productivty: an International Study
(), STOLOWY Hervé
() and TENENHAUS Michel
Abstract: The objective of this paper is to explore the impact of
R&D expenditures on company performance. R&D activities play an essential
role in the future economic development and financial performance of firms.
However, with the exception of some American studies, the economic
effectiveness of such investment is seldom demonstrated explicitly by the
literature, and to the best of our knowledge, there are no existing studies
on R&D productivity taking an international approach. Our research design
is based on an earnings equation associating earnings with recorded assets,
R&D expenditures and selling, general and administrative (SG&A) expenses
(proxying advertising expenses). We determine a rate of return on R&D for
each given sample of firms in 12 developed countries. Our results
corroborate previous studies of American companies, which found that
reported earnings, adjusted for the expensing of R&D, reflect realized
benefits from R&D. This study confirms the positive contribution of R&D
activities to future company performance, although this contribution can
vary from one country to another.
Keywords: R&D productivity; R&D profitability; international study; (follow links to similar papers)
JEL-Codes: O32; (follow links to similar papers)
39 pages, March 1, 2003
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