Determinants and persistence of research and development investments: Evidence from Malaysia

Abstract

Purpose

The purpose of this paper is to investigate the determinants and persistence of research and development (R&D) investments in Malaysia.

Design/methodology/approach

The approach involves a regression analysis.

Findings

The regression analysis shows that lagged absorbed slack defined as the ratio of selling and administrative expenses to total sales and sales growth have positive affect on the R&D expenses, whereas diversification has negative impact on R&D expenses after controlling for leverage and profitability of the firms. Persistence in the firm‐level R&D expenses is found. Occasional tendency among firms to cut down R&D spending over the period of 2000‐2005 is found.

Research limitations/implications

Sample size is a limitation.

Practical implications

The findings have implications for the corporate governance and innovation charter of the firms.

Originality/value

The paper provides useful information from Malaysia regarding the determinants and persistence of R&D investments.

Citation

Othman, R. and Ameer, R. (2009), "Determinants and persistence of research and development investments: Evidence from Malaysia", International Journal of Emerging Markets, Vol. 4 No. 3, pp. 275-292. https://doi.org/10.1108/17468800910968427