Analysis of the Relationship between R & D Expenditure and Profitability: A Sample Application from BIST
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Published
Dec 31, 2016
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Abstract
Gaining competitive advantage of countries and firms largely depends on innovation and developing new products. R & D activities provide important contribution to growth and also performance of firms. The pharmaceutical sector is a strategic sector as well as its added value is high. Moreover, this sector necessitates high R & D expenditures. In this study, a sample application will be given after emphasizing to the global developments in the R & D and pharmaceutical sector. In this context, the causality relationship between R & D expenditures, gross profit and operation profit variables of one of the largest pharmaceutical firm in Turkey is investigated based on quarterly time series for the period of 2005:1-2015:3. The relationships between variables are tested by Granger Causality Test. According to the findings, it is found that there is a one-way causality relationship from R & D expenditures towards operational profit
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How to Cite
VURUR, Necmiye Serap; ILARSLAN, Kenan.
Analysis of the Relationship between R & D Expenditure and Profitability: A Sample Application from BIST.
Journal of Multidisciplinary Developments, [S.l.], v. 1, n. 1, p. 103-112, dec. 2016.
ISSN 2564-6095.
Available at: <http://www.jomude.com/index.php/jomude/article/view/13>. Date accessed: 21 jan. 2025.
Section
Social Sciences - Regular Research Paper
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Ayaydin, H., & Karaaslan, I. (2014). The Effect of Research and Development Investment on Firms’ Financial Performance: Evidence from Manufacturing Firms in Turkey. The Journal of Knowledge Economy & Knowledge Management (Bilgi Ekonomisi ve Yönetimi Dergisi). 9(1), 23-39.
Awokuse, T. O. (2003). Is the Export-Led Growth Hypothesis Valid For Canada? Canadian Journal of Economics. 36(1), 126-136.
Chen, P. C., Chan, W. C., Hung, S. W., Hsiang, H. J., & Wu., L. C. (2016). Do R&D Expenditures Matter More Than Those of Marketing to Company Performance? The Moderating Role of Industry Characteristics and Investment Density. Technology Analysis & Strategic Management. 28(2), 205-216.
Chumaidiyah, E. (2012). The Technoloji, Technical Skill, and R&D Capability in Increasing Profitability on Indonesia Telecommunication Services Companies. Procedia Economics and Finance. 4, 110-119.
Coombs, E. J., & Bierly, P. E. (2006). Measuring Technological Capability and Performance. R & D Management. 36(4), 421-438.
Dickey, D. A., & Fuller, W. A. (1981). Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root‛, Econometrica, 49(4), 1057-1072.
European Commission. (2015). “The 2015 EU Industrial R&D Investment Scoreboard”, Online: http://iri.jrc.ec.europa.eu/scoreboard15.html Accessed on 12th Dec. 2016.
Gergerli, A. (2015). Türkiye ve AB Ülkelerindeki Ar-Ge ve Yenilikçilik Verilerinin Kıyaslaması ve Analizi. Anahtar. TC. Bilim, Sanayi ve Teknoloji Bakanlığı Yayını. 27(319), 11.
Ghaffar, A., & Khan, W. A. (2014). Impact of Research and Development on Firm Performance. International Journal of Accounting and Financial Reporting. 4(1), 357-367.
Granger C. W. J. (1988). Some recent developments in the concept of causality‛. Journal of Econometrics. 39, 199-211.
Hajiheydari, A., Dastgir, M., & Soltani, A. (2011). The Effect of Research and Development Costs on the Profitability of Pharmaceutical Companies. Interdisciplinary Journal of Contemporary Research in Business. 3(8), 914-918.
Jin, X., Lei, G., & Yu, J. (2016). Goverment Governance, Executive Networks and Enterprise R&D Expenditure. China Journal of Accounting Research. 9, 59-81.
Nunes, P. M., & Serrasqueiro, Z. (2015). Profitability Determinants of Portuguese Knowledge-Intensive Business Services: Empirical Evidence Using Panel Data Models. Applied Economics Letters. 22(1), 51-56.
Ozturk, E., & Zeren, F. (2015). The Impact of R&D Expenditure on Firm Performance in Manufacturing Industry: Further Evidence From Turkey. International Journal of Economics and Research. 6(2), 32-36.
Rao, J., Yu, Y., & Cao, Y. (2013). The Effect That R&D Has on Company Performance: Comparative Analysis Based on Listed Companies of Technique Intensive Industry in China and Japan. International Journal of Education and Research. 1(4), 1-8.
Shin, N., Kraemer, K. L., & Dedrick, J. (2009). R&D, Value Chain Location and Firm Performance in the Global Electronics Industry. Industry and Innovation. 16(3), 315-330.
Statista. Online: http://www.statista.com/statistics/309466/global-r-and-d-expenditure-for-pharmaceuticals/
Thomson Reuters. (2015). “2015 CMR International Pharmaceutical R&D Executive Summary”. Online: http://cmr.thomsonreuters.com/pdf/Executive_Summary_Final.pdf Accessed on 13rd Dec. 2016.
VanderPal, G. A. (2015). Impact of R&D Expenses and Corporate Financial Performance. Journal of Accounting and Finance. 15(7), 135-149.
Vithessonthi, C., & Racela, O. C. (2015). Short-and Long-Run Effects of Internationalization and R&D Intensity on Firm Performance. Journal of Multinational Financial Management. 34, 28-45.
Voulgaris, F., & Lemonakis, C. (2014). Competitiveness and Profitability: The Case of Chemicals, Pharmaceuticals and Plastics. The Journal of Economic Asymmetries. 11, 46-57.
Warusawitharana, M. (2015). Research and Development, Profits, and Firm Value: A Structural Estimation. Quantitative Economics. 6, 531-565.
Xu, J., & Jin, Z. (2016). Research on the Impact of R&D Investment on Firm Performance in China's Internet of Things Industry. Journal of Advanced Management Science. 4(2), 112-116.