Abstract
R&D investment has long been the firm foundation of the electronics industry's competitiveness. According to some prior literature on the linear model, R&D investment has a positive effect on innovation performance and company performance. However, there is still some question concerning whether more R&D investment is always better. As to enterprise, managers are more concerned about the limits of R&D investment. When do the costs of R&D investment exceed the benefits? This study uses Taiwan's electronics industry as a research sample and examines the curvilinear relationship between R&D investment and firm performance.In contrast to the inclusive findings of previous research, this study uses a panel data approach and shows that R&D investment has an inverted U-shape relationship with firm performance. The deferred effect lasts five years. Moreover, regarding innovation performance, the optimal R&D intensity ranges from 15.12% to 16.81%. Regarding market value, the optimal R&D intensity is about 11.53% for sample firms. Therefore, excessive investment in R&D will lead to decline in a company's performance. Finally, the R&D intensity of Taiwanese electronics industry is about 3% to 4%. This study concludes that the Taiwanese electronics industry still has great potential for additional R&D investment compared to the optimal R&D intensity level.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
