Analysis of the Relationship between R&D and Company Performance

Nadine Weber

Master's thesis

Abstract:

Research and development (R&D) activities are crucial to remain competitive. Extant literature presents divergent views on R&D’s contribution to company performance, specifically profitability and hints at cultural differences in approaching R&D led to analyze such relationship within a regional comparison between Europe and Asia. Filling the research gap focusing on the Technology, Media and Telecommunication (TMT) sector, the study evaluated a sample of 132 Asian and European companies operating in the TMT sector for the 2018 – 2022 period. Using panel generalized method of moments (P-GMM), results showed R&D intensity had a positive but statistically insignificant impact on profitability, but a positive and significant effect on capital market performance. Notably, Asian firms' R&D intensity had a more pronounced impact on performance, supporting literature’s view on cultural differences in R&D strategies.

Abstract:

Research and development (R&D) activities are crucial to remain competitive. Extant literature presents divergent views on R&D’s contribution to company performance, specifically profitability and hints at cultural differences in approaching R&D led to analyze such relationship within a regional comparison between Europe and Asia. Filling the research gap focusing on the Technology, Media and Telecommunication (TMT) sector, the study evaluated a sample of 132 Asian and European companies operating in the TMT sector for the 2018 – 2022 period. Using panel generalized method of moments (P-GMM), results showed R&D intensity had a positive but statistically insignificant impact on profitability, but a positive and significant effect on capital market performance. Notably, Asian firms' R&D intensity had a more pronounced impact on performance, supporting literature’s view on cultural differences in R&D strategies.

Keywords

Research and Development, Profitability, Capital Market Performance, Panel Generalized Methods of Moments, TMT Sector

Keywords

Research and Development, Profitability, Capital Market Performance, TMT Sector, Panel Generalized Methods of Moments

Language used: English

Date on which the thesis was submitted / produced: 24. 8. 2023

Thesis defence

• Date of defence: 5. 10. 2023
• Supervisor: Ladislav Tyll
• Reader: Ivan Balogh

Vysoká škola ekonomická v Praze

Master programme:
International Management