Do R&D expenditures matter more than those of marketing to company performance? The moderating role of industry characteristics and investment density

ABSTRACT

Confronting competitive environment, enterprises differentiate their product by promoting their R&D or marketing capacities. Scholars have verified that there is a direct relationship and a deferred effect between R&D expenditures and firm performance, but that there exists an inconsistency between marketing expenditures and firm performance. However, previous studies have neglected to analyse and compare the impact of corporate R&D and marketing investment on performance, and also ignored the moderating effects of different industry characteristics and investment densities. The study attempts to fill the gap by constructing a model to accommodate all these factors. The empirical results indicate that R&D and marketing expenditures have a positive impact on enterprise operating performance, and that there is a longer deferred effect in R&D expenditures than in marketing expenditures. By investing in R&D expenditures, manufacturing enterprises can increase their performance more than in service enterprises, and electronic enterprises can improve their performance compared with other types of firms. Finally, investments with higher R&D density can result in a higher performance.

KEYWORDS:

• Research and development expenditure
• marketing expenditure
• firm performance
• industry characteristics
• investment density

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes on contributors

Shiu-Wan Hung is Distinguished Professor and Chair at the Department of Business Administration of National Central University, Taiwan. She received her Ph.D. from the Institute of Business and Management of National Chiao Tung University, Taiwan. Her researches mainly focus on areas of technology management, knowledge management and performance management. Dr. Hung has had articles published in the European Journal of Operational Research, OMEGA, Information & Management, Computers & Education, and other journals.

Ping-Chuan Chen is currently the Chief of Operating Officer at Taiwan Biomaterial Company Ltd. He received his Ph.D. from the Department of Business Administration of National Central University, Taiwan. His research interest focuses on areas of new product development & management, and leveraging advanced technology for economic improvement and industrial development based on his practice experience. He has had articles published in the International Journal of Operations & Production Management, Technology Analysis & Strategic Management, British Food Journal, Technology in Society and other journals.

Wu-Chiang Chan is currently the Director, Cross-Strait Biotech Industry Cooperation Promotion Office, Development Center of Biotechnology, Taiwan. He also had severed as the administrator in the Science & Technology Advisory Group, the Executive Yuan. He received his M.S. from the Department of Business Administration of National ChengChi University, Taiwan. His research interests mainly focus on areas of technology management & new product development, innovation ecosystem management and industrial development based on his practice experience.

Yi-Jung Hsiang is currently the Ph.D. student at Department of Business Administration, National Central University, Taiwan. She also serves as the senior manager in Biotechnology & Pharmaceutical Industries Promotion Office, Ministry of Economic Affairs, Taiwan. She received her M.S. from the School of Nutrition and Health Sciences of Taipei Medical University of Taiwan in 1998. Her research interests focus on areas of innovation products development and strategy, biotech industrial development, business strategy and performance management.

Li-Chang Wu is currently the student, Department of Business Administration, National Central University, Taiwan. His research interest focuses on areas of innovation and technology management.