研發投入對公司經營風險的影響機制研究

Abstract

China’s economy has achieved rapid growth since the reform and opening-up policy. However, a series of problems hidden beneath the GDP growth during this early phase of economic development has also started to emerge, such as excess capacity, low technological content and low innovation capability. R&D and innovation activities provide the most important way to resolve these economic predicaments and achieve economic transformation. But compared with fixed asset investment, the proportion of R&D investment is low in China. It is mainly because the widely held view that generally regards R&D as high-risk activities, which leads to insufficient R&D investment. However, compared to tangible fixed assets investment, does R&D investment really increase firm’s risk? How does R&D investment affect firms’ operational risk? It is very important to correctly understand the risks caused by R&D investment and the impact mechanism from which such risks arise. 

First of all, according to the economic production decision theory, both R&D investment and fixed assets are two important production factors of the company, forming company’s production possibility curve. The company’s optimal product portfolio and the corresponding production factor inputs are decided when the production possibility curve is tangent to the equal profit line. Especially it is a gradual process for firm’s product or technology innovation. In this gradual process, the firm needs to continuously adjust the structure of production scale and factor inputs to realize the desired product structure between new and old products. Excessive investment in any production factors will cause the firm’s inappropriate product portfolio, and hence raise the firm’s operating risk. 

Secondly, based on the risk formation mechanism and the process of firm value realization, this paper establishes the mechanism by which the firm’s R&D investment influences its operational risk. The paper analyzes such a mechanism from three aspects: namely, risk element, factors affecting the risk element, and their impacts. These analyses help to lay a theoretical foundation for the strategy of empirical test.

Finally, this paper empirically tests the impacts of R&D investment and fixed asset investment on the firm’s operating risk. The first step is to test the main hypothesis that, compared with the fixed asset investment, the firm’s R&D investment significantly actually reduces the firm’s operating risk when other conditions remain unchanged. This is because China’s over-investment in fixed assets and insufficient investment in R&D are widespread. Increasing R&D investment can make the input structure of production factors more reasonable and reduce the company’s operating risks. The second step is to test the internal adjustment effects, based on the internal adjustment factors of agency costs and execution capabilities. The agency problem will lead to deviations of the management decision-making, in terms of the combination of the two production factors of R&D and fixed assets, from the optimal input combination of the product, thereby increasing the firm’s operational risk. The third step is to test the external adjustment effects. Information asymmetry and financing constraints will cause the management to make mistakes in evaluating the two production factors of R&D and fixed assets in decision-making, causing deviations from the optimal input combination of products and increasing the firm’s operational risk. 

The conclusions of this paper provide a theoretical basis for corporate R&D investment decisions.

Date of Award	18 Mar 2020
Original language	Chinese (Traditional)
Awarding Institution	City University of Hong Kong
Supervisor	Yong WANG (Supervisor) & Shizheng QIAN (External Supervisor)