The relationship between cost behaviour and R&D efficiency: empirical evidence from Korean stock markets

ABSTRACT

Strategic resource distribution and efficient use of limited resources are important in business operations. Cost behaviour is an indicator of these investment strategies. Previous studies have attributed the asymmetry of cost behaviour to managerial expectations. When managers expect future sales revenue to increase, they incur surplus expenses to avoid adjustment costs. In this research, we analyzed whether the cost behaviour stemming from such choices is related to future R&D efficiency. We divided KOSPI and KOSDAQ samples showing sales increases into ‘stickiness’ and ‘anti-stickiness’ groups and compared R&D efficiency using data from successive years. In the case of the KOSPI market, the stickiness group had higher future R&D efficiency than the anti-stickiness group. Conversely, in the case of the KOSDAQ market, the anti-stickiness group had higher future R&D efficiency than the stickiness group. The results elucidate the relationship between cost behaviour and R&D efficiency and show that investment strategy patterns depend on the specific characteristics of stock markets. This research enhances the related literature and the understanding of cost behaviours that reflect distinct investment strategies.

KEYWORDS:

• Cost behaviour
• R&D efficiency
• investment strategy
• data envelopment analysis

Acknowledgements

The authors would like to thank editors and anonymous reviewers for their constructive comments and helpful suggestions. This study also could be improved by valuable comments and dedicated supports of SPM lab.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Sangpil Yoon

Sangpil Yoon is a Ph.D. candidate at Korea Advanced Institute of Science and Technology (KAIST). He received his master’s degree from KAIST. His research interests are technology commercialisation, performance management, and R&D efficiency. His research papers have been published in global leading journals such as Technovation and Science & Public Policy.

Yanghon Chung

Dr. Yanghon Chung is a full professor at Korea Advanced Institute of Science and Technology (KAIST). He received his Ph.D. from Georgia State University and has expertise in performance management issues in the context of sustainable R&D, environmental innovation, alternative energy development, and government policy.

Hosung Son

Dr. Hosung Son is an assistant professor at Hoseo university. He received his Ph.D. from Korea Advanced Institute of Science and Technology (KAIST). His research interests are entrepreneurial behaviour, technology commercialisation, innovation management, and organisation management. Dr. Son's research papers have been published in the Social Sciences Citation Index (SSCI) journals such as Technovation, Science & Public Policy, and Sustainability.