THE RELATIONSHIP BETWEEN R&D EXPENDITURES AND COMPANY PERFORMANCE: AN EXPLORATORY STUDY

This paper focuses on R&D expenditures and company performance. The major objective of this paper is to identify the impact of R&D expenditures on company performance. Many companies would like to be able correlate R&D expenditure with profitability. Based on extensive literature review, document analysis, Web research, and observation. This paper intends to address the following issues: where companies need to invest, which projects and technology to invest in, and when to stop spending money into a project that looks likely to fail but could yet deliver enormous profits. The findings of this paper provide a theoretical basis, and simultaneously can be used to analyse relationship between R&D expenditures and profitability. From management perspective, this paper identified several factors essential to improve activities of research and development from companies. R&D expenditure should be viewed as a long-term investment. However,it may even reduce short-term profitability