What are good R&D investment strategies for leaders and followers?

Research and development (R&D) investment affects the growth of firms in the same industry differently according to their technological positions. This study empirically investigates differences in how R& D investment influences firm growth between technological leaders and followers. Additionally, this study investigates the moderating effects of complementary assets and market competition on the relationship between R&D investment and firm growth. Using a sample of 2322 observations from 492 firms in the U. S. chemical and allied products industry for the period 2000-2009, we show that an increase in R&D investment leads to greater firm growth for technological followers than for technological leaders. We also find that the moderating effects of complementary assets and market competition vary depending on whether a firm is a technological leader or follower.