Firm Size and R&D
An Empirical Study on 2005-2014 Worldwide Top1000 R&D Investors
2016 Volume 5 Issue 1 Pages 51-56
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2016 Volume 5 Issue 1 Pages 51-56
Accelerating M&A of worldwide giant firms in 2015 evokes Galbraithian hypothesis. Galbraith (1952) has asserted that only a few giant firms can conduct technological innovation required in the modern world to develop new products and processes. This view has been challenged and extensively tested since the 1960s. In general, a popular outlook on the advantage of firm size in conducting R&D has been transferred to the smaller, younger and fast-growing firms, which can play an important role for an invention. As noted in Cohen (2010), however, the question of the relationship between firm size and R&D efficiency remains open. Using data on worldwide Top1000 investors in selected R&D intensive industries from 2005-2014 EU Industrial R&D Investment SCOREBOARD, the relationship among sales, R&D expenditures and profitability is more closely examined. The central direction toward Galbraithian hypothesis can be identified with both nonlinear regression analysis and time-series analysis. More significantly, nations with increasing R&D intensity tend to improve the profitability.
