The purpose of this paper is to investigate the determinants and persistence of research and development (R&D) investments in Malaysia.
The approach involves a regression analysis.
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.
Sample size is a limitation.
The findings have implications for the corporate governance and innovation charter of the firms.
The paper provides useful information from Malaysia regarding the determinants and persistence of R&D investments.
