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The impact of interaction between size, R and D strategy, and industry R and D intensity on performance
Abstract
This study was designed to answer the following guestion: What is the relationship between industry R&D requirements--determined by the level of industry R&D intensity (environment), firm size (using sales) as a structural aspect (organization structure), firm's R&D expenditure (functional strategy), and performance? The specific interest was to look for the three-way interaction between firm size, R&D strategy, and industry R&D intensity; and to assess the impact of this interaction on performance. The performance of organizations was measured by the total yearly sales, total assets, operational profit, and return on assets for 1975, 1977, and 1979. R&D strategy was measured by the average R&D expenditures in 1973 and 1974; size was measured by the average sales during the same years. The industry's R&D intensity was measured by the average ratios of total R&D expenditures to the total sales of each industry in 1973 and 1974. The findings indicated that performance was determined by the interaction between size, R&D strategy, and industry R&D intensity. In high R&D industries, small organizations with no R&D expenditure seemed to outperform those with R&D expenditure; and for large organizations, an expenditure higher than the industry average tended to improve performance. In low R&D industries, an increase in R&D expenditure seemed to improve performance of small organizations up to a point, at which an increase in R&D expenditure would have a negative effect on performance. For large organizations, an R&D expenditure higher than the industry average again would improve performance. This study presented findings which support the call for more empirical studies which use a contingency approach by considering environment, strategy, organization structure, and performance simultaneously. Moreover, this study has raised questions for further research, such as: Can marketing be an important substitute strategy for R&D in high R&D industry, especially for small organizations? What specific R&D strategy would be appropriate for small or large organizations in both high and low R&D industries?
Subject Area
Management
Recommended Citation
Tjan, Soen Eng, "The impact of interaction between size, R and D strategy, and industry R and D intensity on performance" (1988). ETD collection for University of Nebraska-Lincoln. AAI8914090.
https://digitalcommons.unl.edu/dissertations/AAI8914090