Impact of R&D expense on firm performance for technology companies in China

Abstract

The relationship between R&D Expense and Firm Performance has always been discussed and highly debatable. Large quantities of researches had been conducted in order to find out whether this relationship exists or not. The majority of the previous researches shows a positive effect of R&D investment on firm performance. However, some of the researches provided different points of view that this kind of relationship does not exist. The purpose of this study is to find out the relationship between R&D expense and firm performance for the 10 largest technology companies in China for 5 years period (between 2014-2018). In order to get the result, panel data analysis and pooled regression model are used. In conclusion, it is believed that there is a strong positive relationship exist between R&D expense and Firm Performance for technology companies in China.