The Effect Of R&D Investment On Company Performance

Technique innovation, which is the basic source of economic growth, now gradually becomes the precondition of companies’survival and development, especially technology intensive companies. R&D is not only a significant measure for companies to undertake technique innovation but also the most important and primary connotation of the technical innovation. As the international competition became increasingly severe, accurate selection of the projects, effective management of the activities in R&D and proper evaluation of the R&D effectiveness would directly influence the competitive edge and performance of an enterprise. The research on relationship between R&D and company performance gradually constitute a hot issue that attracts attentions.This paper firstly reviewed the research of correlation between R&D investment and company performance from both domestic and overseas. Then, this paper adopted the method of empirical research. With the panel data of technology intensive company from2007to2012as the research object, this paper established a regression model by choosing R&D investment as explanatory variable, ROE as explained variable, the capital structure, firm size, growth rate of revenue and cash position as control variables, analyzed the correlation between R&D investment and company performance and the lag period and effect period of the correlation. In addition, this paper took a comparative analysis on the technique innovation in China and Japan to get the conclusion. Empirical research showed that:Firstly, the level of R&D investment of technology intensive enterprises in our country is respectively lower, which has distance with that of the Japan; secondly, R&D investment has an positive influence on the company’s future performance, which works for a short time period; thirdly, the technology innovation environment of China is less mature than that of Japan at present. At last, this paper put the related research conclusion in practical application and recommended that companies should pay more attention to the R&D investment and improve R&D investment decisions.