The Effects Of R&D Expenditure And Marketing Investment On Firm Growth: An Empirical Study

With global competition intensifying and accelerating changes of the enterprise’s external environment, Chinese enterprises will face more global challenges. With such fierce market competition, some companies may continue to expand and to capture more market share, while others gradually decline or even go succumb. It is very challenging for a company to be survival and keep a good development always during the fierce competition. What can a company do to maintain the momentum of development? As Peter Drucker said:"innovation and marketing" is the key to survival. Whether or not corporate innovation and marketing investment can really promote the enterprise to grow? Or is it influenced by other factors? This dissertation attempts to explore these questions.This paper firstly make lots of literature reading about corporate growth, research and development, marketing investment and the relationship among them, and on the process of summarize the relationship of them, a certain relationship among firm growth, research and development investment, marketing investment and corporate governance are found. On the base of domestic and abroad related research, conceptual model is given after present the theory assumptions of this study. Samples are choosen from mainland Unbalanced panel listed companies and213listed companies five years data are collected. Related assumptions are tested by system GMM method of Stata software and the conclusions of this paper are as followed:(1) R&D expenditure and marketing investment, both have a direct positive impact on corporate sales growth. The impact of marketing investment is more obvious than that of R&D. This conclusion is consistent with Krasnikov&Jayachandran’s conclusions, the influence of marketing inputs is stronger than the impact of R&D expenditure on sales growth.(2) For the profits growth, marketing investment has a direct impact; whereas the impact of R&D investments on profits growth are due to different lag times. The result show R&D investment has a negative effect on profits growth for the first-lag value, then a positive influence for the two-lag value.(3) The companies independent directors failed to have a significant direct impact on sales growth, while executive pay has a significant direct effect on sales growth. Both of the independent directors and executive pay have a positive moderating effect on the relationship between marketing investment and sales growth, but executive pay shows no significant moderating effect between R&D expenditure and sales growth.(4) The executive pay has a direct impact on corporate profits, whilst the independent directors do not have such a significant direct impact. There is a significant moderating effect of company independent directors of the relationship between R&D expenditure and profits growth, or between marketing investment and profits growth. Executive pay still shows a significant moderating effect between marketing investment and profits growth, while not showing a significant moderating role between R&D expenditure and profits growth.Based on the empirical results of this study, relevant inspirations are achieved and some future research directions are introduced.