Title: How companies respond to growing research costs: cost control or value creation?

Authors: Karl-Heinz Leitner; Bianca Maria Poti; René J.M. Wintjes; Jan Youtie

Addresses: Center for Innovation Systems and Policy, AIT Austrian Institute of Technology, Giefinggasse 4, 1210 Vienna, Austria; Center for Entrepreneurship and Applied Business Studies, University of Graz, Elisabethstraße 50b/II, 8010 Graz, Austria ' CNR IRCRES, via dei Taurini 19, 00185 Roma, Italy ' UNU-MERIT, Boschstraat 24, 6211 AX Maastricht, The Netherlands ' Enterprise Innovation Institute, Georgia Institute of Technology, 75 Fifth Street, NW, Suite 3000, Atlanta, Georgia 30308, USA

Abstract: Over the last two decades, R&D costs have been increasing significantly across almost all industries. While there is much literature studying different strategies to exploit R&D investments, we know little about the relative importance of controlling costs. Based on case studies of European and US multinational, R&D intensive companies, we study how firms deal with growing R&D costs. We investigate different strategies companies can employ to respond to growing research costs. Such strategies can be oriented towards controlling cost or focused on opportunities to create value. The case studies reveal that company spending on R&D is not perceived as a cost per se, but rather as an investment. Cost considerations are secondary factors and the main drivers of research investments are based on the expected value of innovations, risk and strategic competence development, and anticipating uncertainty concerning the kind of research that might be needed in the future.

Keywords: evolution of R&D costs; managerial strategies; cost drivers; cost control; internationalisation; open innovation; case studies; R&D management; R&D productivity; outsourcing.

DOI: 10.1504/IJTM.2020.107407

International Journal of Technology Management, 2020 Vol.82 No.1, pp.1 - 25

Accepted: 07 Jan 2020
Published online: 22 May 2020 *

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