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Investment In Research & Development and Innovation Vis-À-Vis Economic Success of the Companies

Content

• Introduction
• Problem Statement and Research Questions
• Research Methodology
• Literature Review
• Report Structure and Timeline
• Limitations and Ethics
• Conclusion
• References

Introduction

Innovation is essential for any organization. In the current economy filled with competition, innovation can provide the cutting edge over the other competitors.  Innovation can not only provide the new products, but it can also help in improving the process and the product efficiency. Michelini has rightly referred to it as the life and blood of the corporate growth in the current world  (Michelini, 2012).

But innovation is the slow process. Each innovation is not successful. Neither can success of innovation be measured. This creates the crisis in the innovation in the organization. Many of the companies end up cutting up the expenditure associated with the innovation in order to meet the profit. Despite understanding the importance of the innovation and research, many of the companies are unwilling to invest in the field of innovation and R&D because not every dollar invested in the field is converted into the output  (Wessel, 2012).

Thus it is necessary to understand how the innovation is associated with the success of any organization. The question that arises is whether there is a relation between the investment in the field of R&D and innovation and the success of the company or not. This is what this research tries to analyze. By analyzing the investment of the companies in terms of the R&D and innovation and the financial indicators of the companies, this research tries to establish if there is any relationship between the investment and the success of the company in terms of investment. Various financial indicators like revenue, share value, profit, etc. are analyzed vis-à-vis the investment in terms of research and development and innovation department.

Problem Statement and Research Questions

The current research will try to understand the relationship between the research spending and economic growth of the company. Thus the problem statement for the research can be stated as “to establish if there is a relation between the company’s investment in terms of innovation and research and development and company’s economic growth”. For this purpose, automobile sector is taken as the reference.  As per a strategic report developed by PWC, the automotive industry is third largest industry investing in research and development and innovation (Jaruzelski & Hirsh, 2015). This research focuses on the different players in the industry and draws a relation between the investment in research and development department and the growth of the company.

Research Questions can be summed up as:

1. Is there any relation between the investment in R&D and the company’s success?
2. Does more investment on innovation means more profit for the company?
3. Is there any effective percentage of R&D expenditure that the companies must follow to achieve success?
4. What is the future of R&D expenditure in automobile industry?

Research Methodology

The research carried on the subject will be a secondary research which will involve the study of various literature and reports already published on the subject matter. Past 1 year of data will be taken into account to establish the relation. The secondary data will be collected from the various sources like the company’s annual report, newspaper articles, journal articles, and websites like Yahoo! Finance.

The analysis carried for the subject will be quantitative in nature mainly. The qualitative analysis will also be utilized to understand the reason behind the relationship between investment on innovation and the economic growth.

Literature Review

A company can follow various kinds of innovations: in terms of products, in terms of the services, and in terms of processes utilized by them. These innovations can be a slow process or it can be a disruptive innovation which can change the face of the whole industry (Czárl & Belovecz, 2007). It is known that innovation is essential for the companies. Yet there are many reasons companies question the innovation:

1. Difficult to measure the instant result of the innovation.
2. Uncertainty associated with the success of the innovation.
3. Uncertainty associated with the diffusion of innovation in other departments(Pissano & Figgie, 2012).

These few factors make the companies more conservative towards the research and development investment, and the question about what is the right amount to invest comes again and again.

Report Structure and Timeline

The research will be divided into the following sections:

1. Development of the introduction along with research objectives and questions: This section will be a week long and will focus on development of the objectives associated with the research. The background to the study will be explored here. This process will be one-week long.
2. Literature review: The second leg of the research will involve development of the literature review. The literature associated with the subject will be studied and understood to make a good analysis in the coming sections. The time frame expected for this is 2 weeks.
3. Collection of data and analysis: Different data associated with the research will then be collected and analyzed. This part is the meat of the research and hence it is expected that the researcher will spend somewhere around 4 weeks on the process.
4. Interpretation of data and declaration of results: This section will focus on development of the results based on the above analysis. Final interpretation of analysis will be done here. The time period expected for this is around one week.
5. Recommendation and future research: The last section of the research will involve making the recommendation based on the research. Future avenues of the research will also be established. This activity will wrap up the research in one week.

Limitations and Ethics

The researcher does not expect any ethical problem with the research as the data collected and analyzed is freely available in the public domain. The biggest limitation about the research is that it is based on secondary data whose authenticity is difficult to confirm. However, different kinds of literature will be reviewed to make sure the research data is accurate.

Conclusion

This research will help in understanding if investment inn field of innovation is really important and how the companies can utilize the innovation to the maximum advantage of theirs. Such a research can prove vital in the final success of the company over the long-run.

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