ABSTRACT
This study investigates the R&D persistence with different external conditions based on US listed manufacturing firms for the period 2011–2019. Specifically, we analyze whether the fluctuation of R&D investment is related to short-term changes in sales, and how industrial technological intensity and competitive environment influence the relationship. We used the cost asymmetry model to identify the changes in R&D investment by sales behaviour. The results showed that the R&D investment of high-tech firms was stickier when sales declined as compared to low-tech firms. Therefore, R&D persistence tends to be strong in high-tech firms. In addition, R&D persistence was weakened by the competitive environment, and this finding was more pronounced for high-tech firms than for low-tech firms. This study has academic implications in the empirical analysis of the relationship between R&D persistence and external characteristics from a dynamic perspective.
Acknowledgement
This work was supported by the research grant of the Chungbuk National University in 2019.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Correction Statement
This article has been republished with minor changes. These changes do not impact the academic content of the article.
Notes
1 R&D expenditure in a financial statement is different from the actual cash-outflow of firms resulting from R&D in countries with International Financial Reporting Standard (IFRSs) that allows capitalisation of R&D. However, Generally Accepted Accounting Principle (GAAP) is applied in the United States, which limits capitalisation of R&D and mitigates the gap between accrual basis R&D and cash basis R&D. It is more appropriate in our study to use US firms’ data to capture short-term changes of R&D and pursue our research purpose.
Additional information
Notes on contributors
Heeju Hwang
Heeju Hwang is a specialist at Korea Development Institute. His areas of interest and research are in the managerial accounting of technological innovation and sustainable public investment
Soojeen Jang
Soojeen Jang is a Ph.D. candidate in School of Business and Technology Management at KAIST. Her research interests include organisational behaviour and innovation.
Yanghon Chung
Yanghon Chung is a Professor in School of Business and Technology Management at KAIST. He has expertise in performance management issues in the context of technological innovation, sustainable R&D and government policy. Prof. Chung was the president of the Korea Association of Business Education and Management Accounting Association of Korea.
Hangyeol Seo
Hangyeol Seo is an assistant professor in School of Business at Chungbuk National University. He has expertise in performance management issues in the context of Managerial Accounting, Technological Innovation.