Untying the Relationship Between R&D and Firm’s Performance: A Mediation Analysis of BSE Listed Companies in India
Keywords
R&D expenditure, firm performance, capital structure, mediating effect, GMMAbstract
This study reveals the capital structure as a moderating effect between R&D Expenditure and firm performance. Capital structure is a major part of a business enterprise that ensures the financial funding for innovation and brings new products to the market. Return on assets (ROA), return on equity (ROE), and return on capital (ROCE) are taken as dependent variables. The authors computed R&D Intensity from the ratio of R&D Expenditure and total sales, which was considered as an independent variable. Firm Size and capital structure are considered as control variables and mediating variables. Also, this study shows an adverse outcome of R&D Intensity on firm performance using pooled-OLS, fixed-effect, random-effect, and dynamic panel regression for a sample of BSE100 firms for the 2015-2024 to 2023-24 periods. The insight of the study is valuable for the management, policymakers, investors, and government who are interested in R&D Expenditure and in understanding the relationship between R&D Intensity and firm performance.
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Copyright (c) 2026 Biki Digar, Brajaballav Pal, Sanjib Das
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