Empirical Study on the Determinants of Industrial Research and Development Expenditures

This study focuses on the wide range of manufacturing industries in Japan and hypothesized the numerous factors external to a corporation particularly for abstracting the determinants of research and development (R&D) expenditures. Previous studies primarily dealt with internal corporate factors such as sales, operating profits, or diversification. This study selected, integrated, and performed multiple regression analyses for nine industries based on the panel data concerning R&D expenditures. This resulted in the abstraction of statistically significant factors. R&D expenditures in the preceding term are an internal factor. This could be considered a comprehensive and continuous indicator of the scale of a corporation, its performance, its fixed R&D expenditures and corporate strategies. External factors cited are growth of the market, competitiveness, export dependency, labor intensity, and whether products are directed toward end-customers. This study would especially aid in deciding the R&D strategy as an aspect of the company expenses.