The R&D Investment-Uncertainty Relationship: Do Strategic Rivalry and Firm Size Matter?
نویسندگان
چکیده
This paper uses a real options perspective to augment the standard R&D investment model and implements a firm-level empirical analysis to assess the practical significance of market uncertainty and its interactions with strategic rivalry and firm size. We use a measure of firm-relevant market uncertainty along with panel data and find that firms invest less in current R&D as uncertainty about market returns increases. The effect of firm-specific uncertainty on R&D investment is smaller in concentrated markets – those where strategic rivalry is more intense. Furthermore, holding access to financing constant, the effect of uncertainty on R&D investment is attenuated for large firms.
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