The Threshold Effect and Optimal Effect of R&D Investment－Evidence of Taiwanese Listed Manufacturing Companies

• Main Authors: Chih-Chung Kuo, 郭智中
• Other Authors: Kuo-Pin Yang
• Format: Others
• Language: zh-TW
• Published: 2005
• Online Access: http://ndltd.ncl.edu.tw/handle/22927468847170777969

碩士 === 國立東華大學 === 國際企業學系 === 93 === While most past studies found positive association Between R&D investment and firms’ performance, some argued that R&D investment could do harm to firms’ performance. We argue that the inconsistent results among related literature may be partly attributed to the widely-adopted methodology of simple linear modeling; that is, considering either positive or negative relationship only but excluding nonlinear correlation. Therefore, this research aims to establish a curvilinear relationship between R&D and performance, in which there exist both a threshold level and an optimal level for firms’ R&D investment. Based on the S-curve postulated by Foster (1986), three hypotheses are derived: a ∪-shaped curvilinearity between R&D and performance at the first stage, with a minimum required level for R&D investment to be effective and an inverted ∪-shaped curvilinearity at the second stage, with an optimal level of R&D investment corresponding to maximum profitability. Empirical evidences from a sample of 404 Taiwanese listed manufacturing covering period from 2000 to 2003 confirm our three hypotheses. This study not only establishes a relationship pattern distinguishing from past studies, but also brings important managerial implications to firms’ R&D practices, as well as policy implications to the administration.