The Impact of R&D Expenditures on Corporate Performance: Evidence from Slovenian and World R&D Companies
Abstract
:1. Introduction
2. Theoretical Considerations and Literature Review
2.1. R&D Expenditures and Operating Performance
2.2. R&D Expenditures and Market Performance
3. Data and Research Methods
3.1. Sample Selection
3.2. Variables
3.2.1. Dependent Variables
3.2.2. Independent Variable
3.2.3. Control Variables
3.3. Research Methods
4. Empirical Results
4.1. Descriptive Statistics
4.2. Multiple Regression Analysis
5. Concluding Remarks
5.1. Discussion and Conclusion
5.2. Theoretical and Practical Implications
5.3. Limitations and Future Research
Author Contributions
Acknowledgments
Conflicts of Interest
References
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Year | Number of Companies | Share of Companies (in %) |
---|---|---|
2012 | 585 | 17.21 |
2013 | 669 | 19.68 |
2014 | 721 | 21.21 |
2015 | 743 | 21.86 |
2016 | 681 | 20.04 |
Total | 3399 | 100 |
Economy | Number of Companies | Share of Companies (in %) |
---|---|---|
EU | 1611 | 31.59 |
USA | 1728 | 33.88 |
China | 840 | 16.47 |
Japan | 921 | 18.06 |
Total | 5100 | 100 |
Abbreviation | Variable | Definition | Slovenian Companies (Source) | World R&D Companies (Source) |
---|---|---|---|---|
Dependent variables | ||||
ROA | Return on assets | The ratio between net profit and total assets. | X (AJPES) | |
ROE | Return on equity | The ratio between net profit and total equity. | X (AJPES) | |
ROS | Return on sales | The ratio between net (operating) profit and net sales. | X (AJPES) | (X) (EC) |
PSR | Price-to-sales ratio | The ratio between market capitalisation and net sales. | X (EC) | |
Independent variable | ||||
RDI | R&D intensity | The ratio between R&D expenditures and net sales. | X (SORS) | X (EC) |
Control variables | ||||
LEV | Financial leverage | The ratio between total liabilities and total assets. | X (AJPES) | |
LIQ | Liquidity | The ratio between short-term assets and total assets. | X (AJPES) | |
NSG | Net sales growth | Simple 1-year growth of net sales, measured as index. | X (AJPES) | |
CEI | Capital expenditure intensity | The ratio between capital expenditure and net sales. | X (EC) | |
SIZE | Company size | The natural logarithm of total assets (net sales). | X (AJPES) | (X) (EC) |
YEAR | Year dummy variable | Dummy variable that takes 1 for a year studied, 0 otherwise. | X (AJPES) | X (EC) |
Variable | Mean | SD |
---|---|---|
ROA | 0.073 | 0.101 |
ROE | 0.132 | 0.208 |
ROS | 0.063 | 0.104 |
RDI | 0.186 | 0.341 |
LEV | 0.426 | 0.224 |
LIQ | 0.562 | 0.232 |
NSG | 0.105 | 0.381 |
SIZE | 14.928 | 2.007 |
Variable | Mean | SD | Min | Max |
---|---|---|---|---|
ROS | 0.058 | 0.168 | −0.545 | 0.293 |
PSR | 2.474 | 2.597 | 0.224 | 11.692 |
RDI | 0.096 | 0.119 | 0.005 | 0.489 |
CEI | 0.057 | 0.049 | 0.009 | 0.218 |
SIZE | 21.271 | 1.639 | 17.847 | 24.230 |
Variable | ROA | ROE | ROS | RDI | LEV | LIQ | NSG | SIZE |
---|---|---|---|---|---|---|---|---|
ROA | 1 | |||||||
ROE | 0.860 *** | 1 | ||||||
ROS | 0.830 *** | 0.751 *** | 1 | |||||
RDI | −0.089 *** | −0.091 *** | −0.026 ** | 1 | ||||
LEV | −0.365 *** | −0.137 *** | −0.372 *** | −0.026 | 1 | |||
LIQ | 0.308 *** | 0.261 *** | 0.182 *** | −0.021 | −0.196 *** | 1 | ||
NSG | 0.258 *** | 0.289 *** | 0.191 *** | 0.113 *** | 0.067 *** | 0.090 *** | 1 | |
SIZE | −0.146 *** | −0.119 *** | −0.062 *** | −0.394 *** | 0.061 *** | −0.305 *** | −0.136 *** | 1 |
Variable | ROS | PSR | RDI | CEI | SIZE |
---|---|---|---|---|---|
ROS | 1 | ||||
PSR | −0.321 *** | 1 | |||
RDI | −0.637 *** | 0.715 *** | 1 | ||
CEI | −0.169 *** | 0.244 *** | 0.190 *** | 1 | |
SIZE | 0.423 *** | −0.472 *** | −0.621 *** | −0.087 *** | 1 |
Total Sample | |||||||
---|---|---|---|---|---|---|---|
Variable | Predicted Sign | Model 1 (a) ROA | Model 1 (b) ROA | Model 2 (a) ROE | Model 2 (b) ROE | Model 3 (a) ROS | Model 3 (b) ROS |
RDIt | - | −0.029 ** | −0.056 ** | −0.030 ** | |||
(0.009) | (0.020) | (0.009) | |||||
RDIt−1 | + | 0.034 ** | 0.047 * | 0.033 ** | |||
(0.011) | (0.024) | (0.012) | |||||
LEV | - | −0.194 *** | −0.169 *** | −0.251 *** | −0.235 *** | −0.156 *** | −0.115 *** |
(0.014) | (0.019) | (0.033) | (0.042) | (0.015) | (0.021) | ||
LIQ | + | 0.041 ** | 0.079 *** | 0.115 ** | 0.141 ** | 0.041 ** | 0.061 ** |
(0.014) | (0.019) | (0.033) | (0.043) | (0.016) | (0.022) | ||
NSG | + | 0.056 *** | 0.058 *** | 0.130 *** | 0.128 *** | 0.043 *** | 0.036 *** |
(0.004) | (0.005) | (0.009) | (0.012) | (0.004) | (0.006) | ||
SIZE | + | 0.018 *** | 0.027 *** | 0.042 *** | 0.045 ** | 0.052 *** | 0.055 *** |
(0.005) | (0.008) | (0.012) | (0.016) | (0.006) | (0.008) | ||
Constant | ? | −0.138 | −0.170 | −0.452 * | −0.562 * | −0.664 *** | −0.779 *** |
(0.078) | (0.107) | (0.182) | (0.248) | (0.085) | (0.120) | ||
Year | ? | Yes | Yes | Yes | Yes | Yes | Yes |
R2 | 0.1106 | 0.1574 | 0.0334 | 0.0479 | 0.0115 | 0.0116 | |
Observations | 3399 | 2116 | 3399 | 2116 | 3399 | 2116 | |
LM test | 1009.64 *** | 572.09 *** | 641.48 *** | 435.42 *** | 943.72 *** | 551.17 *** | |
F test | 49.09 *** | 47.31 *** | 52.17 *** | 41.06 *** | 56.58 *** | 62.48 *** | |
Hausman test | 49.68 *** | 41.79 *** | 51.36 *** | 36.84 *** | 91.04 *** | 48.36 *** |
High-Tech Sample | |||||||
---|---|---|---|---|---|---|---|
Variable | Predicted Sign | Model 1 (a) ROA | Model 1 (b) ROA | Model 2 (a) ROE | Model 2 (b) ROE | Model 3 (a) ROS | Model 3 (b) ROS |
RDIt | - | −0.024 * | −0.043 | −0.027 * | |||
(0.010) | (0.024) | (0.011) | |||||
RDIt−1 | + | 0.031 * | 0.046 | 0.039 ** | |||
(0.013) | (0.028) | (0.014) | |||||
LEV | - | −0.215 *** | −0.173 *** | −0.334 *** | −0.272 *** | −0.160 *** | −0.106 *** |
(0.019) | (0.024) | (0.042) | (0.053) | (0.020) | (0.027) | ||
LIQ | + | 0.019 | 0.089 *** | 0.043 | 0.120 * | 0.031 | 0.075 ** |
(0.019) | (0.025) | (0.043) | (0.055) | (0.021) | (0.028) | ||
NSG | + | 0.058 *** | 0.061 *** | 0.144 *** | 0.141 *** | 0.051 *** | 0.048 *** |
(0.005) | (0.007) | (0.011) | (0.015) | (0.005) | (0.008) | ||
SIZE | + | 0.020 ** | 0.013 | 0.051 ** | 0.045 * | 0.053 *** | 0.050 *** |
(0.007) | (0.009) | (0.015) | (0.019) | (0.007) | (0.010) | ||
Constant | ? | −0.140 | −0.129 | −0.504 * | −0.540 | −0.665 *** | −0.709 *** |
(0.101) | (0.133) | (0.230) | (0.291) | (0.109) | (0.148) | ||
Year | ? | Yes | Yes | Yes | Yes | Yes | Yes |
R2 | 0.1253 | 0.2204 | 0.0418 | 0.0846 | 0.0198 | 0.0346 | |
Observations | 2142 | 1354 | 2142 | 1354 | 2142 | 1354 | |
LM test | 567.40 *** | 314.92 *** | 417.48 *** | 282.45 *** | 568.10 *** | 316.96 *** | |
F test | 36.31 *** | 29.32 *** | 38.58 *** | 25.85 ** | 41.92 *** | 33.17 *** | |
Hausman test | 34.36 *** | 28.26 *** | 38.64 *** | 25.71 ** | 63.02 *** | 41.65 *** |
Low-Tech Sample | |||||||
---|---|---|---|---|---|---|---|
Variable | Predicted Sign | Model 1 (a) ROA | Model 1 (b) ROA | Model 2 (a) ROE | Model 2 (b) ROE | Model 3 (a) ROS | Model 3 (b) ROS |
RDIt | - | −0.041 * | −0.099 * | −0.030 | |||
(0.018) | (0.045) | (0.020) | |||||
RDIt−1 | + | 0.089 ** | 0.126 * | −0.040 | |||
(0.027) | (0.063) | (0.030) | |||||
LEV | - | −0.162 *** | −0.153 *** | −0.089 | −0.129 * | −0.162 *** | −0.153 *** |
(0.021) | (0.027) | (0.053) | (0.065) | (0.024) | (0.031) | ||
LIQ | + | 0.098 *** | 0.084 ** | 0.256 *** | 0.221 ** | 0.071 ** | 0.059 |
(0.020) | (0.028) | (0.052) | (0.065) | (0.023) | (0.031) | ||
NSG | + | 0.048 *** | 0.048 *** | 0.094 *** | 0.090 *** | 0.015 * | 0.013 |
(0.006) | (0.008) | (0.014) | (0.018) | (0.006) | (0.009) | ||
SIZE | + | 0.017 * | 0.040 *** | 0.028 * | 0.082 ** | 0.056 *** | 0.086 *** |
(0.008) | (0.012) | (0.020) | (0.028) | (0.009) | (0.013) | ||
Constant | ? | −0.169 | −0.539 ** | −0.388 | −1.228 ** | −0.759 *** | −1.225 *** |
(0.120) | (0.184) | (0.303) | (0.436) | (0.135) | (0.207) | ||
Year | ? | Yes | Yes | Yes | Yes | Yes | Yes |
R2 | 0.0846 | 0.0049 | 0.0363 | 0.0032 | 0.0009 | 0.0053 | |
Observations | 1257 | 744 | 1257 | 744 | 1257 | 744 | |
LM test | 433.15 *** | 255.12 *** | 201.56 *** | 135.02 *** | 322.94 *** | 183.84 *** | |
F test | 22.46 ** | 29.03 *** | 27.72 ** | 28.20 *** | 31.58 *** | 54.17 *** | |
Hausman test | 24.76 ** | 41.99 *** | 23.01 ** | 33.68 *** | 51.16 *** | 73.40 *** |
Total Sample | High-Tech Sample | Low-Tech Sample | |||||
---|---|---|---|---|---|---|---|
Variable | Predicted Sign | Model 4 (a) ROS | Model 4 (b) ROS | Model 4 (a) ROS | Model 4 (b) ROS | Model 4 (a) ROS | Model 4 (b) ROS |
RDIt | - | −1.162 *** | −1.160 *** | −1.405 * | |||
(0.177) | (0.056) | (0.551) | |||||
RDIt−1 | + | 0.275 * | 0.279 *** | 0.210 | |||
(0.133) | (0.079) | (0.841) | |||||
CEI | - | −0.211 ** | −0.335 ** | −0.235 *** | −0.369 *** | −0.009 | 0.052 |
(0.076) | (0.124) | (0.053) | (0.080) | (0.133) | (0.245) | ||
SIZE | + | 0.050 *** | 0.133 *** | 0.050 *** | 0.136 *** | 0.061 ** | 0.108 ** |
(0.015) | (0.022) | (0.008) | (0.013) | (0.021) | (0.040) | ||
Constant | ? | −0.887 ** | −2.781 *** | −0.870 *** | −2.835 *** | −1.235 ** | −2.354 ** |
(0.327) | (0.466) | (0.167) | (0.268) | (0.474) | (0.890) | ||
Year | ? | Yes | Yes | Yes | Yes | Yes | Yes |
R2 | 0.3812 | 0.1372 | 0.4307 | 0.1614 | 0.0403 | 0.0103 | |
Observations | 5100 | 3400 | 4326 | 2884 | 774 | 516 | |
LM test | 2987.47 *** | 943.35 *** | 2507.75 *** | 790.10 *** | 417.77 *** | 132.42 *** | |
F test | 25.78 *** | 62.91 *** | 20.40 *** | 59.01 *** | 24.25 *** | 12.08 * | |
Hausman test | 97.04 *** | 229.96 *** | 75.15 *** | 212.08 *** | 17.66 *** | 10.65 * |
Total Sample | High-Tech Sample | Low-Tech Sample | |||||
---|---|---|---|---|---|---|---|
Variable | Predicted Sign | Model 5 (a) PSR | Model 5 (b) PSR | Model 5 (a) PSR | Model 5 (b) PSR | Model 5 (a) PSR | Model 5 (b) PSR |
RDIt | + | 3.155 * | 3.036 *** | 5.197 *** | |||
(1.568) | (0.705) | (1.326) | |||||
RDIt−1 | + | 1.051 | 1.115 | 4.394 ** | |||
(2.146) | (0.786) | (1.442) | |||||
CEI | + | 3.310 ** | 2.689 | 3.534 *** | 2.985 *** | 1.703 ** | 1.256 |
(1.047) | (1.501) | (0.671) | (0.804) | (0.701) | (1.000) | ||
SIZE | - | −1.199 *** | −0.589 ** | −1.257 *** | −0.636 *** | −0.159 * | −0.137 * |
(0.128) | (0.193) | (0.099) | (0.127) | (0.057) | (0.064) | ||
Constant | ? | 27.490 *** | 14.806 *** | 28.659 *** | 15.669 *** | 4.609 *** | 4.237 ** |
(2.747) | (4.171) | (2.103) | (2.682) | (1.301) | (1.454) | ||
Year | ? | Yes | Yes | Yes | Yes | Yes | Yes |
R2 | 0.3045 | 0.2698 | 0.3018 | 0.2686 | 0.1341 | 0.1303 | |
Observations | 5100 | 3400 | 4326 | 2884 | 774 | 516 | |
LM test | 3333.41 *** | 1268.46 *** | 2742.37 *** | 1055.46 *** | 665.73 *** | 226.41 *** | |
F test | 69.58 *** | 35.81 *** | 66.76 *** | 34.02 *** | 0.95 | 1.91 | |
Hausman test | 296.07 *** | 217.54 *** | 245.36 *** | 195.31 *** | 7.04 | 24.43 |
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Ravšelj, D.; Aristovnik, A. The Impact of R&D Expenditures on Corporate Performance: Evidence from Slovenian and World R&D Companies. Sustainability 2020, 12, 1943. https://doi.org/10.3390/su12051943
Ravšelj D, Aristovnik A. The Impact of R&D Expenditures on Corporate Performance: Evidence from Slovenian and World R&D Companies. Sustainability. 2020; 12(5):1943. https://doi.org/10.3390/su12051943
Chicago/Turabian StyleRavšelj, Dejan, and Aleksander Aristovnik. 2020. "The Impact of R&D Expenditures on Corporate Performance: Evidence from Slovenian and World R&D Companies" Sustainability 12, no. 5: 1943. https://doi.org/10.3390/su12051943