The impact of technology strategy on firm performance

This study focuses on the link between research and development (R&D) expenditures and two firm technology measures: technological cycle time; and technological strength. The subsequent focus is on the two firm technology measures and firm performance while controlling for firm size and productivity. An empirical test on 49 firms across several industries revealed that the first link was quite weak, possibly caused by the inclusion of much engineering on ongoing operations being included in R&D. However, the overall model results were quite strong, showing that 45% of the variation in firm performance, measured by operating profits, was explained by the comprehensive three-stage model.