THE RELATIONSHIP BETWEEN RESEARCH AND
DEVELOPMENT (R & D) EXPENDITURE WITH COMPANY’S PERFORMANCE: EVIDENCE FROM
HIGH TECHNOLOGY (HIGH-TECH) INDUSTRIES IN
REN TING YU
ABSTRACT
Product innovation
is one of the most important competitive factors for succeeding in today’s
rapidly changing business environment. Research and Development (R & D) is
a key factor of product innovation and has become an integral part of many
companies, especially those in high-technology manufacturing or research
oriented industries. R & D intensive companies compete to become the first
with a new innovation that will catapult them to unprecedented sales and
earnings. Some companies opt to capture a new and growing market base by
developing a new technology not yet widely available. Given the strategic
significant of R & D, how would it relate to business performance? There is
no easy answer to this commonly asked question. Although there is a broad link
between sales and R & D expenditures, exact relationships change over time
and differ greatly from country to country and from industry to industry. Some
industries require high R & D budgets while others can get by on much
smaller budgets. To make any meaningful comparison at all, we narrowed our
analysis to three of the most research-oriented industries, buy which to
represent the whole situation of high technology industries. This study
attempts to describe the Malaysia high-tech industry R&D performance and
furthermore, to identify if there is any statistical evidence of the effects of
R&D intensity on four operational and performance measures: subsequent
sales growth rate, subsequent year’s profit margin (profitability), subsequent
year’s return on assets, and subsequent year’s sales per employee
(productivity) respectively. Finally, study will give some recommendations to
improve the current situation of R&D in
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