@article {1971141,
	title = {The Return on R\&D Versus Capital Expenditures in the Pharmaceutical and Chemistry Industies},
	journal = {IEEE Transactions on Engineering Management},
	volume = {50},
	year = {2003},
	month = {2003},
	pages = {141 -150},
	abstract = {The impact of research and development (R\&D) on firm performance is generally agreed to be positive, but the nature and extent of this impact share little agreement in the previous research. Using an improved, time series, cross-sectional regression model that accounts for both contemporaneous and firm-specific serial correlation, as well as the feedback between firm profitability and investments, our study compares the rate of return from a dollar investment on R\&D to a dollar investment on fixed assets in pharmaceutical and chemical industries. We find positive associations of R\&D intensity and all variables of firm performance (net margin, operating margin, sales growth, and market value). We find that an investment in R\&D earns an operating margin return much higher than the industry cost of capital. We also find that the effect of an investment in R\&D on the firm{\textquoteright}s market value is about twice as much the effect of an investment in fixed assets. These findings have implications for corporate investment strategies, indicating that additional R\&D investment is more likely to provide a firm with a unique and sustainable competitive advantage.},
	keywords = {Strategy \& Entrepreneurship, Supply Chain},
	author = {Hsieh,Ping-Hung and Mishra,C. S. and Gobeli,Dave}
}
