If you are experiencing problems downloading PDF or HTML fulltext, our helpdesk recommend clearing your browser cache and trying again. If you need help in clearing your cache, please click here . Still need help? Email help@ingentaconnect.com

The relationship between capital investment and R&D spending: a panel cointegration analysis

$54.78 plus tax (Refund Policy)

Buy Article:


Previous research has shown inconsistent results pertaining to the relationship between capital investment in property, plant and equity and research and development spending (R&D). This study re-examines that relationship between capital investment and R&D in a panel of 36 pharmaceutical firms. This study uses short- and long-run causality methods to capture the connection between the two variables. The short-run causality evidence confirms the research by Mairesse and Siu (1984) documenting that capital investment does not Granger-cause R&D and vice versa. On the other hand, the long-run causality test suggest that R&D and capital investment are cointegrated and the causality runs in both directions. These results imply that capital investment depends on the success of the R&D effort over time. The implementation of breakthroughs created by R&D may require additional capital investment, e.g. facilities and equipment. Moreover, thriving investment activity in one period may stimulate R&D efforts the next period, in order to extend the success of the current products.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/09603100600870976

Affiliations: Department of Finance and Real Estate, University of Texas at Arlington, Arlington, TX 76019, USA

Publication date: July 1, 2007

More about this publication?
Related content

Share Content

Access Key

Free Content
Free content
New Content
New content
Open Access Content
Open access content
Subscribed Content
Subscribed content
Free Trial Content
Free trial content
Cookie Policy
Cookie Policy
ingentaconnect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more