Business Strategy and R&D Expenditures

Abstract

This research testifies that there is a positive relationship between business strategy and R&D expenditures based on the data from the listed firms in China. The paper also finds that the management myopic behaviour would make the firms reduce the R&D spending when the strategy score is in the higher level. Furthermore, the research shows the positive relationship between strategy and R&D expenditures still exits when the firms are SOEs and the firms have medium or high level of internal control quality. The result is robustness even after making the endogeneity tests.