Analyses & Alternatives 2024 KCI Impact Factor : 0.71
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pISSN : 2508-822X / eISSN : 2508-8238
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The effect of R&D investment in Chinese private firms on firm performance and value: The moderating effect of ESG score
- Analyses & Alternatives
- Abbr : A&A
- 2024, 8(2), pp.87~115
- DOI : 10.22931/aanda.2024.8.2.004
- Publisher : Korea Consensus Institute
- Research Area : Social Science > Social Science in general
- Received : May 21, 2024
- Accepted : June 12, 2024
- Published : June 30, 2024
1인천대학교 중국학술원
Accredited
ABSTRACT
This study examines the effect of R&D investment on firm performance and value of Chinese private firms. Through R&D investment, firms aim to acquire knowledge and technological resources to create innovation and competitive advantage, which ultimately enhances firm performance and value. However, unlike other investments, R&D investments are characterized by high adjustment costs and risks, uncertainty and asymmetric information. In addition, the effect of R&D investment on firm performance and value has been shown to be mixed results due to various internal and external contextual factors. Therefore, this study intends to consider how the ESG activities of firms, which have recently attracted attention, act as a contextual factor in the results of R&D investment. This is because interaction with stakeholders through ESG activities is considered to be an important factor in securing competitive advantages and sustainable growth.
In this context, this study measures the effect of a firm’s R&D investment on its business performance by dividing it into financial performance and value, respectively, and examines the moderating effect of ESG score on the relationship. Based on empirical analysis of all Chinese private firms from 2010 to 2019, the results show that a firm’s R&D investment has a negative impact on performance and a positive impact on value. Furthermore, a high ESG score of private firms positively moderates each relationship, emphasizing the importance of ESG activities.
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