R&D intensity, free cash flow, and technological innovation: evidence from high-tech manufacturing firms in China
R&D intensity, free cash flow, and technological innovation: evidence from high-tech manufacturing firms in China
Xin Kuang(Department of Business Administration, School of Economics and Management, Tongji University, Shanghai, People’s Republic of China); Chen Xin(Department of Business Administration, School of Economics and Management, Tongji University, Shanghai, People’s Republic of ChinaSchool of Business, University of Shanghai for Science); Zhang Ran(School of Statistics and Information, Xinjiang University of Finance and Economics, Urumqi, People’s Republic of China); Sun Yuchun(Department of Business Administration, School of Economics and Management, Tongji University, Shanghai, People’s Republic of China)
27권 2호, 214~238쪽
초록
Technological innovation, which can be classified into major and minor innovation, enables firms to gain competitive and sustainable advantage in the changing environment. R&D investment and financial resources are recognized as two critical factors for fostering technological innovation. Based on a panel dataset of 257 listed Chinese high-tech manufacturing firms over the period of 2008–2015, we explored the effect of R&D intensity on technological innovation and the moderating role of free cash flow using negative binormal regression models. Our results reveal that the relationship between R&D intensity and technological innovation (both major and minor innovation) follows an inverted U pattern in which technological innovation increases with R&D intensity at decreasing rates and falls gradually after R&D intensity exceeds a threshold. Our results also indicate that free cash flow plays a moderating role in the relationship between R&D intensity and major innovation but not in the relationship between R&D intensity and minor innovation. Our study draws attention to the improvement of R&D investment efficiency in high-tech manufacturing firms and sheds light on the importance of holding cash in major innovation-oriented firms.
Abstract
Technological innovation, which can be classified into major and minor innovation, enables firms to gain competitive and sustainable advantage in the changing environment. R&D investment and financial resources are recognized as two critical factors for fostering technological innovation. Based on a panel dataset of 257 listed Chinese high-tech manufacturing firms over the period of 2008–2015, we explored the effect of R&D intensity on technological innovation and the moderating role of free cash flow using negative binormal regression models. Our results reveal that the relationship between R&D intensity and technological innovation (both major and minor innovation) follows an inverted U pattern in which technological innovation increases with R&D intensity at decreasing rates and falls gradually after R&D intensity exceeds a threshold. Our results also indicate that free cash flow plays a moderating role in the relationship between R&D intensity and major innovation but not in the relationship between R&D intensity and minor innovation. Our study draws attention to the improvement of R&D investment efficiency in high-tech manufacturing firms and sheds light on the importance of holding cash in major innovation-oriented firms.
- 발행기관:
- 기술경영경제학회
- 분류:
- 과학기술학