Title: Does R&D really drive competitive advantage and performance?

Authors: Nicholas O'Regan, Martin A. Sims, Abby Ghobadian

Addresses: Bristol Business School, University of the West of England, Coldharbour Lane, Bristol BS16 1QY, UK. ' University of Hertfordshire, College Lane, Hatfield, Herts AL10 9AB, UK. ' Henley Management College, Greenlands, Henley-on-Thames, Oxfordshire, RG9 3AU, UK

Abstract: Recent research has shown that Research and Development (R&D) has a significant impact on performance in manufacturing small- and medium- sized firms. However, corporate performance is often hampered by a failure to effectively convert R&D into innovation, leading to a negative impact on both growth and quality and consequently corporate performance. This paper develops and tests a methodology using a number of characteristic footprints to represent the R&D, innovation, growth and quality variables and their overall impact on corporate performance. This paper also uses a new approach to multivariate analysis based on the conditional formatting of spreadsheets and the use of nested logical operators for complex comprehension, as well as established statistical techniques. The findings indicate that R&D expenditure impacts positively on both innovation and growth and is therefore an important driver for enhanced financial performance. The results of this study indicate significant links between R&D, innovation and growth. Each link is underpinned by quality attributes. These findings should assist SMEs to navigate the often risky, complicated and time consuming route from R&D to enhanced financial performance.

Keywords: research and development; R&D expenditure; innovation; quality; corporate performance; competitive advantage; SMEs; small and medium-sized enterprises; financial performance.

DOI: 10.1504/IJMTM.2008.020175

International Journal of Manufacturing Technology and Management, 2008 Vol.15 No.3/4, pp.376 - 403

Published online: 06 Sep 2008 *

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