The impact of innovation on R&D effectiveness

Alex J. Kim, Cheong Kyu Park

Research output: Contribution to journalArticlepeer-review

Abstract

This study investigates whether being an innovator improves the effectiveness of R&D spending in the financial market. Prior studies have shown that a firm's R&D has a positive effect on its performance in the financial market, while there are mixed results on the impact of being an innovator in the financial market performance. Using a unique dataset of the innovation, we report evidence that being an innovator has a significant positive impact on the effectiveness of its R&D success. In particular, we find a positive and significant coefficient on the interaction term between R&D and innovation. The results indicate that firms tend to enjoy higher financial market performance in the future, as their R&D spending increases and they are innovators in the market. This study contributes to the literature by showing empirical evidence that the effectiveness of R&D increases as firms being more innovative.

Original languageEnglish
Pages (from-to)4981-4988
Number of pages8
JournalInformation (Japan)
Volume19
Issue number11
StatePublished - Nov 2016

Keywords

  • Financial performance
  • First mover advantage
  • Product innovation
  • R&D spending

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