Abstract
This paper investigates the relationship between diversification of R & D investment and profitability by using the panel data of individual companies and measuring diversification with the quantitative index and the qualitatively strategic classification. The process of the diversification index does not show big change on the whole, but varies from industry to industry, and the degree of the index also varies the variation from each industry, for instance the level of high technology is high and domestic is low. Then the ratio of strategic classification of diversification indicates that firms often diversify the R & D investment, especially around related business field. Additionally this study demonstrates that the more diversified, the less profitable the company is. Based on the findings, it is suggested that choice, concentration and upgrading intangible qualification are important for R & D investment.
