Essays on R&D, information technology, and firm performance

We study the joint effects of R&D and IT investments on firm performance and productivity growth and explore whether their interaction effects make a difference under different scenarios. Although several studies have focused on the relationship between R&D investments and firm profitability and productivity, many aspects of the relationship is underexposed and left unanswered questions in researchers' minds. On another hand, the effect of computerization and information technologies on firm productivity has also been extensively studied both in the academic and practitioner literature and over the years a discrepancy has been formed on its impact on productivity.;In this dissertation, we study three different problems emerging in this context: the theoretical modeling of the interaction effect between R&D and IT and its impact on firm performance, the empirical study of the effects of this interaction on firm performance, and the trade-off between IT risk and return.;In Chapter 2, we establish a theoretical framework for the joint impact of R&D and IT on the rate of productivity growth and firm performance. We propose that better IT capabilities may help to improve the share of the progressive components of R&D. The increase in the share of the scalable components of R&D in turn improves the equilibrium rate of productivity growth and firm gross margin.;We address the second problem in Chapter 3. IT investments play a key role in enabling R&D processes by creating a significant competitive advantage for firms especially in knowledge intensive industries. We empirically study the joint impact of IT and R&D on firm performance using a multi-year archival data. Our results reveal the moderating role of IT investments in improving the productivity of R&D investments.;In Chapter 4, we empirically study the relationship between IT risk and return. We conduct a replication analysis using a recent and unique dataset across a sample of firms from a large variety of industry sectors. While we find little support on the relative contribution of IT on firm risk, we support the highly positive return on IT among high IT risk firms.