R&D intensity,firm performance and the identification of the threshold: fresh evidence from the panel threshold regression model |
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| Authors: | Ming-Liang Yeh Hsiao-Ping Chu Peter J. Sher Yi-Chia Chiu |
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| Affiliation: | 1. Department of Business Administration , National Chung Hsing University , Taichung, Taiwan mlyeh@dragon.nchu.edu.tw;3. Department of Business Administration , National Chung Hsing University , Taichung, Taiwan;4. Department of Business Administration , Ling Tung University , Taichung, Taiwan;5. Department of International Business Studies , National Chi Nan University, Nantou , Taiwan;6. Department of Business Administration , National Chung Hsing University , Taichung, Taiwan |
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| Abstract: | This article tests whether there is an optimal level of research and development (R&D) intensity at which point a firm is able to maximize its performance. An advanced panel threshold regression model is employed to investigate the panel threshold effect of R&D intensity on firm performance among publicly traded Taiwan information technology and electronic firms. The results confirm that a single-threshold effect does exist and show an inverted-U correlation between R&D intensity and firm performance. This article demonstrates that it is possible to identify the definitive level beyond which a further increase in R&D expenditure does not yield proportional rewards. Some important policy implications emerge from the findings. |
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