An empirical study on the R&D determinants through firm-level financial analysis

Abstract

As the knowledge-based economy has become the new economy paradigm and the era of information and telecommunication(IT) technology has started as the leading factor of national growth, each individual firm have been doing their best to enhance their competitiveness by upgrading their IT technological potentiality through augumenting Research and Development(R$\amp$D) investment. However, after the economic crisis, the firms have reduced the R&D investment under the pressure of restructuing, which is quite within the realms of possibility to make the competitiveness of firm and industry weaken, and moreover, it will have negative effect to diminish the national productivity in the long run. This is against the fundamental purpose of restructuring. So to avoid this misstep, the economic analysis of R&D investment should be made and then, long-term plan for allocating R&D resources should be designed on basis of the cost and benefit analysis calculated precisely. Especially, The determinants and effects of R&D investment in IT industry being considered as the critical factor for knowledge-based economy should be scrutinized to distribute the limited resources efficiently. However, previous studies concerned with IT R&D investment just focused on the state of conditions to enumerate the situation and some problems. Even some analyzing researches merely testified the relationship between IT investment and productiviry improvement or economic growth. Therefore, it is worthwhile to empirically investment the determinants of R&D investment in IT industry and provide the valuable information to make the strategy accelerating R&D activities and allocate the limited resource reasonably to reinforce competitiveness. Hence, we extract the financial factors determining R&D investment of individual firms in IT industry through the literature reviews and setup the model as follow, H190$\triangle$R&D=$\beta_1$+$\delta$(Dummy) + $\beta_2$$\triangle$(Asset)+$\beta_3$$\triangl...