A multi-industry contingency model of R&D intensity in declining organizations

Abstract

This paper proposes an alternative way of thinking about the issues of managing technology and R&D strategy. Drawing on the literature of organizational decline, the paper develops and tests a contingency model of firms' adaptation of their R&D intensity in response to decline. Results from a sample drawn from two “non-high tech” industries suggest that even in these industries, R&D often represents not a slack resource but rather a critical component of a firm's strategic posture. Further, findings indicate that firms' pre-decline R&D intensity moderates the relationship between severity of decline and degree of cutbacks in R&D spending. Low initial R&D intensity firms exhibited strong responses to the decline while high initial R&D firms showed almost no reaction at all. The strategic implications of these results are discussed.