Faculty of Engineering and Natural Sciences
FENS IE SEMINARS
R&D and Information Technology Investments and Firm Performance: A Complementarities Model
We explore the role of IT in moderating the impact of R&D investments on firm performance. The mixed evidence on the impact of R&D on product innovation or revenue growth brings to mind new questions of whether R&D alone is a sufficient determinant to explain firm performance. As IT plays a key role in the execution of innovation, it is unclear to what extent spending on IT has allowed knowledge workers to become more productive and contribute to the growth in firm profitability. We examine the joint impact of R&D and IT on firm performance using recently available data (1998 to 2004) that allows us to study the profitability impact of newer technologies at the firm level. Our results indicate that IT spending does moderate the impact of R&D spending on two metrics representing the financial and innovation dimension of firm performance: gross margin and patent count. However, these effects are not observed across the board for all types of firms. Rather, the moderation impact of IT is observed only for firms that spend below their respective industry R&D median levels, while there are no significant effects for firms that are high spenders of R&D and IT. These results shed new light on the relationship between investments in innovation and firm performance.
Gokcen Arkali is a Ph.D. candidate in Operations Management at the
Dallas. She obtained her B.S. degree in Electrical Engineering from
University (1999), M.S. degree in Electrical Engineering from Southern Illinois University (2003), and M.S. degree in Supply Chain Management from
Dallas (2006). Her research interest is broadly in the area of technology and innovation management. Her current research focuses on the joint impact of R&D and Information Technology investments on productivity and firm performance. She has been working as an instructor at the
Management at UT-Dallas and teaching production management class to the undergraduate students.
Wednesday, 7 January 2009, 13:40-14:30,