Research and development investment and operational performance of listed small and medium-sized enterprises in China

ABSTRACT

This study aims to investigate the impact of research and development (R&D) investment on the operational performance of small and medium-sized enterprises (SMEs) from 2013 to 2017. The findings show that there is a significant negative relation between R&D investment and the operational performance of SMEs in China. This negative effect lasts for three years subsequent to R&D investment. In addition, there is no positive relation between R&D investment and the operational performance of SMEs. The relation between R&D investment and operational performance appears significantly negative for non-state-owned enterprises (non-SOEs) and SMEs with an R&D investment intensity of more than 5%. However, it is non-significant for state-owned SMEs (SOEs) and SMEs with an R&D investment intensity of less than 5%. The two-stage method of the Heckman test and propensity score matching (PSM) are employed in this study to exclude problems of endogeneity, and the results remain robust.

KEYWORDS:

• Small and medium-sized enterprises
• research and development investment
• operational performance
• R&D investment intensity

JEL CLASSIFICATION:

• H25
• O32

Data availabilty statement

The data that support the findings of this study are available from the corresponding author, upon reasonable request.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ National Bureau of Statistics, Ministry of Science and Technology, Ministry of Finance (9 October 2018). The Statistical Bulletin on National Science and Technology Spending in 2017.

² The average R&D investment intensity in China is 2.12%, which is less than the value of 2.40% for OECD countries but more than the value of 2.08% for 15 EU countries.

Additional information

Funding

The authors acknowledge the National Office for Philosophy and Social Sciences [16BGL078]; Guangdong Planning Office of Philosophy and Social Science (CN) [GD15CGL12,GD17XGL36].