The effect of research and development investment and desorptive capacity on firm performance

This research aims to investigate the effect of research and development (R&D) investment on firm performance contingent on desorptive capacity (DC). The structural equation model was used to examine the mediating, independent, moderating, and spurious effects of DC. The empirical results showed that Korean firms’ R&D investment has a positive impact on the firm performance. DC was also found to be a significant variable, which moderates the relation between R&D investment and firm performance. Thus, this study concludes that the increase in R&D investment alone is not sufficient to improve the firm performance which in turn highlights the complementary role of desorptive capacity.