R&D investment, firm performance and moderating role of system and safeguard: Evidence from emerging markets
The relationship between R&D and firm performance is highly dependent on the external environment. Therefore, this paper examined the effects of country level investor protection (safeguards) and governance mechanisms (systems) on the relationship between R&D and firm performance. Using GMM estimation and elasticity testing of panel data for 423 firms from 12 emerging countries, we find that a country’s safeguards tend to moderate the relationship between R&D and firm performance more than the system of a country. The results indicate that safeguarding is relatively more important for the relationship between R&D and firm performance than other country level governance mechanisms, as the former can easily attract outside capital when it is strong. These results have significant implications for innovation policy. In particular, managers may wish to strengthen investor protection to promote high R&D investment in order to increase firm performance.
The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.
Citation : Alam, A., Uddin, M., Yazdifar, H., Shafique, S., & Lartey, T. (2020) R&D investment, firm performance and moderating role of system and safeguard: Evidence from emerging markets. Journal of Business Research, 106, pp.94-105.
ISSN : 0148-2963
Research Institute : Finance and Banking Research Group (FiBRe)
Peer Reviewed : Yes