R&D Activity and Operating Performance of Small and Medium Sized Enterprises (SMEs): The Case of a Small Open Economy
Journal of Accounting and Taxation, Vol. 8(4), pp. 40-50, September, 2016 DOI: 10.5897/JAT2016.0233
11 Pages Posted: 18 Nov 2016
Date Written: November 12, 2016
The paper investigates the impact of R&D activity on operational performance of Small- and Medium-sized Enterprises (SMEs). Prior studies have indicated that R&D activity improves market performance of large listed companies in advanced economies. We extend the research objective on the operational performance of SMEs in the small open Greek economy in which SMEs are normally not listed companies operating in a “bank-driven” financial system. The empirical results highlight the positive role of R&D investment in the performance improvement of SMEs, especially in the increase of operating cash flows and gross profit margins. Furthermore, the results indicate that the performance impact of R&D activity is moderated by the life cycle and firm size, but it does not depend on the technological intensity of the industry. Overall, the findings suggest that R&D activity may be a positive factor in the enhancement of operational performance of SMEs.
Keywords: financial accounting, R&D, operating performance
JEL Classification: M41
Suggested Citation: Suggested Citation