The Impact of Private Research and Development Expenditures and Tax Incentives on Sustainable Corporate Growth in Selected OECD Countries

Abstract

Investment in research and development (R&D) plays a vital role in sustainable economic growth in many countries around the world. In addition, also companies are aware of that R&D investment is becoming more and more important since it can generate future benefits, which may ultimately result in the sustainable corporate growth. The aim of this paper is to evaluate the impact of private R&D expenditures and R&D tax incentives on sustainable corporate growth. Using multiple regression analysis, a panel dataset of 1372 companies investing the largest amounts in R&D activity is analysed. The results of this paper reveal that private R&D expenditures as well as R&D tax incentives (in interaction with private R&D expenditures) have a positive impact on sustainable corporate growth at the firm level in selected Organisation for Economic Cooperation and Development (OECD) countries. The comparison between different subgroups of companies reveals that private R&D expenditures represent one of the main driver of sustainable corporate growth especially in high-tech companies, while R&D tax incentives (in interaction with private R&D expenditures) are key determinant of sustainable corporate growth in both subgroups of companies. The results may help governments in the formulation of relevant R&D tax incentive policy in the future.

State-Business Relations from the Perspective of the Companies' Preparedness for the Changes Related to the Implementation of the Industry 4.0 Elements: A Case of the Czech Republic

“…R&D expenditures, the number of patents (Minford & Meenagh, 2019), and R&D employment intensity (Czarnitzki & Delanote, 2015) most commonly measure innovation performance. Ravšelj and Aristovnik (2018) proved a positive link between tax incentives, R&D expenditures, and corporate growth. They divided companies into subgroups based on R&D intensity and indicated the positive effect of tax incentives in high-tech and low-tech industries.…”

Complex Network Analysis of Transmission Mechanism for Sustainable Incentive Policies

“…Equation 3is the average clustering coefficient, where c i represents the aggregation coefficient of node i. Equations (4) and (5) compare the target network with other random networks, all of which have the same scale. The target network is a small-world network when Equations (4) and (5) are satisfied. Equations (6) and 7calculate L rand and C rand , respectively, which represent the average path length and average clustering coefficient of random networks at the same scale.…”

“…Incentive policies are the main deciding factors in achieving sustainable development, which mainly include tax incentives [1], financial incentives [2], monetary incentives [3], and reward incentives [4]. The Organization for Economic Co-operation and Development (OECD) pointed out that proper incentive policies could promote sustainable corporate growth [5]. The European Union and its member states provide different incentives to make local sustainable development more attractive [6].…”

Change of EU28 countries research and development indicators between 2010 and 2015

“…Other authors solve mutual dependence between total expenditures on the R&D and other key indicators R&D e.g. economic growth, patents, scientific publications in the EU countries (Ravselj, Aristovnik, 2018;Szarowska, 2017). Another indicator which shows a higher orientation on innovation and competitive production with a high added value is the number of patents applied by the subjects of the given economy.…”