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Investigating the need for research and development expenditure as a factor of enhancing the performance of firms

Written by R. T. Ayam

Paper category

Master Thesis


Business Administration>Management




Thesis: Preliminary knowledge The author of this study has studied accounting and finance courses at the master's and bachelor's level, and thus acquired the necessary theoretical knowledge related to R & Dandfirm's performance. In addition, the author has also worked in accounting and has professional experience in the field of accounting. The theoretical knowledge and professional knowledge possessed by the author has always been the source of inspiration for the topic selection. However, the results and conclusions of this study cannot be negatively affected by the author's preconceived ideas, because the entire study relies on scientific measurements based solely on objective evidence. Obviously, this study uses quantitative research methods to study the impact of R&D on corporate performance. Therefore, the use of objective measurements by proposing hypotheses and conducting statistical tests will objectively determine the impact of R&D on company performance. 2.2 Ontological considerations Ontology is a kind of philosophical thinking, focusing on the nature and existence of social phenomena (Gratton & Jones, 2010, p. 24). Investigating the impact of R&D on corporate performance is a social phenomenon. The extent of this impact depends on whether R&D has been spent or capitalized. Ontology also tries to answer the question whether social entities can or should be regarded as objective entities with social actors’ external reality, or whether social phenomena can or should be established from the perceptions and actions of social actors (Bryman & Bell, 2007, p. 22). Therefore, the ontological considerations of this research focus on whether the company’s participation in R&D is based on the views and actions of those who manage the company, or whether R&D as a social phenomenon can have a positive effect on company performance. Influence. Objectivism is also an ontological consideration, which asserts that social phenomena and their meaning exist as external facts that social actors cannot touch or influence (Bryman, 2008, p. 18). Companies can engage in R&D because the organizational rules and regulations stipulate that they should do so without knowing the ultimate impact of R&D on company performance. Therefore, when trying to understand the reality of the impact of R&D on corporate performance, the ontological stance of objectivism is inevitable. This research adopts an objectivist ontological standpoint to better study the reality of the impact of cost-based R&D and capitalized R&D on corporate performance. 2.5 Research technology Social science researchers usually use two main types of research technology when conducting research on social science phenomena, namely quantitative research technology and qualitative research technology. However, quantitative research techniques involve the use of numerical measurements to measure variables, which can then be statistically analyzed. In addition, quantitative research techniques are closely related to positivism (Gratton & Jones, 2010, p. 29). On the other hand, qualitative research techniques aim to capture unquantifiable meanings and characteristics, such as the interviewee’s thoughts, experiences, and feelings, to name a few (Gratton & Jones, 2010, p. 30). Bryman (2008, p. 22) pointed out some fundamental differences between quantitative and qualitative research techniques as shown in Table 1 below. This research uses quantitative research techniques because it allows numerical measurement of the variables studied for statistical testing. The results of the statistical test will allow research questions. As mentioned earlier, the impact of research expensed R&D and/or capitalized R&D on company performance remains to be answered. In addition, the use of quantitative research techniques will be able to collect objective and tangible evidence on R&D and corporate performance, thereby forming a basis for making conclusions on research issues. 2.6 Research methods The three research methods that researchers can use when conducting social science research are inductive, deductive, and additive research methods (Saunders, Lewis, & Thornhill, 2012, p. 144). Inductive research methods require researchers to draw generalizable inferences based on observations, which means moving from observation/discovery to theory (Bryman & Bell, 2007, p. 14). As shown in the figure below: Inductive and deductive research methods, which refer to the situation in which researchers collect data to explore phenomena, identify concepts, and explain patterns to generate new theories or modify existing theories. These theories will then be collected by researchers through additional data Perform the test (Sanders et al., 2012, p. 145). This research uses the abductiveresearch method. At the beginning of the study, theoretical data related to R&D and company performance were provided. Based on these theoretical data, concepts such as expensed R&D and capitalized R&D, as well as concepts such as accounting indicators to measure company performance, have been determined. Read Less