The allocation of R&D funds between product development and process improvements: a follow-up study

Abstract

An earlier study published in the Journal of Strategic Marketing (volume 3) analyses the link between R&D intensity, technological environment and competitive positioning. This paper builds on that study by answering the question 'how are R&D funds allocated between product development and process improvements?' The allocation of funds between product development or process improvement is crucial to business units in a rapidly changing technological environment. Current research recognizes the strategic nature of such choices, and suggests that managers have to understand their technological environment before they gain a competitive advantage. Using the Profit Impact of Market Strategy (PIMS) database, a sample of 2,498 business units are cross-classified into stable and turbulent technological environments, and by the stage of product life-cycle. Analysis of variance is applied in an attempt to determine the response pattern of the product/process technological mix for business units following different...