Analysis of the Relationship Between R&D and Company Performance.

AbstractResearch 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. It hints at cultural differences in approaching R&D. This leads to analyzing such relationships within a regional comparison. Filling the research gap by focusing on the Technology, Media and Telecommunication (TMT) sector, this study evaluated a sample of 132 Asian and European companies operating in the TMT sector for 2018 – 2022. Using the panel generalized method of moments, results showed that R&D intensity had an insignificant impact on profitability but a positive and significant effect on capital market performance. Furthermore, Asian firms’ R&D intensity had a more pronounced influence on performance, supporting the literature’s view on cultural differences in R&D strategies. [ABSTRACT FROM AUTHOR]