TY - JOUR
T1 - When tough get going
T2 - Performance of R&D in the adverse economic conditions
AU - Fan, Di
AU - Rao-Nicholson, Rekha
AU - Su, Yiyi
PY - 2019/1/12
Y1 - 2019/1/12
N2 - How does economic adversity change firms' returns from R&D investments? Economic adversity is argued to limit firms' R&D investments due to financial constraints, yet, conversely, create opportunities for firms to discover novel approaches and potentially increase R&D. To deal with this challenge, firms should assess their organizational adaptability and rigidity in order to make a strategic choice. However, what boundary conditions trigger firms’ strategic choice remains unsolved. Embracing a strategic choice perspective, we investigate the links between economic adversity, R&D and performance across the firm-specific factors in the context of the 2008 global economic crisis. Our empirical analysis adopts a sample of 10,888 firms with an unbalanced panel of 40,599 firm-year observations from 65 countries for the period 2003–2013. We find that, under economic adversity, those firms with either lower market share, a larger number of employees or more physical assets are likely to enjoy a higher level of returns to R&D investments. That is, these firm-specific factors can more likely help firms form organizational adaptability in adverse economic conditions.
AB - How does economic adversity change firms' returns from R&D investments? Economic adversity is argued to limit firms' R&D investments due to financial constraints, yet, conversely, create opportunities for firms to discover novel approaches and potentially increase R&D. To deal with this challenge, firms should assess their organizational adaptability and rigidity in order to make a strategic choice. However, what boundary conditions trigger firms’ strategic choice remains unsolved. Embracing a strategic choice perspective, we investigate the links between economic adversity, R&D and performance across the firm-specific factors in the context of the 2008 global economic crisis. Our empirical analysis adopts a sample of 10,888 firms with an unbalanced panel of 40,599 firm-year observations from 65 countries for the period 2003–2013. We find that, under economic adversity, those firms with either lower market share, a larger number of employees or more physical assets are likely to enjoy a higher level of returns to R&D investments. That is, these firm-specific factors can more likely help firms form organizational adaptability in adverse economic conditions.
U2 - 10.1016/j.lrp.2019.01.004
DO - 10.1016/j.lrp.2019.01.004
M3 - Article
JO - Long Range Planning
JF - Long Range Planning
SN - 0024-6301
ER -