Resource allocation in high technology firms: Managerial strategies and empirical results

Abstract

Two competing theoretical models of strategic allocation decisions are posited and tested. The long-run model hypothesizes that capital expenditures and R&D activities are important determinants of profit in high technology organizations. Alternatively, the short-run model uses marketing expenditures and payments to investors as predictors of profit. A cross-section of 106 high technology firms is used to compare these long-term and short-term strategies. The findings indicate that R&D and investment in capital improvements are important components of profitability in high technology firms.