A Study on the Relationship between R&D Expense and Operating Performance of Multi-national Enterprises in Taiwan

[[abstract]]The advance of technology and coming of the age of automatic revolution haslargely elevated production efficiency. The increase in R&D cost and shortening ofproducts life cycle have driven companies that used to focus on domestic market inthe past either going international or walking out of industries. For companiesoperating activity of planning global range is not only necessary but indispensable.Companies moving abroad to assure supply of raw materials can possibly pay muchattention to many low cost production resources in the globe. For companies thatface global competitive environment, the pressure in technology of innovativeproducts development and extent of cognizing market demand would lead to elevatingtheir competitive and learning ability. The study mainly investigated the relationship between R&D expense input bypublic listed companies in Taiwan and their operating performance, and also whetherdifference in region would have moderating effect on R&D expense and operatingperformance. Empirical results show that as R&D input gets higher, return on assets,return on equity and net profit margin also get higher, supporting Hypothesis 1. The study further explored moderating effect of profitability ratio of subsidiaries indifferent regions on R&D expense over sales ratio and operating performance andfound that as R&D expense over sales ratio of subsidiary in other region gets higher,its profitability ratio and operating performance are also higher, supporting part ofHypothesis 2.Key words: Multi-national enterprise, R&D expense, operating performanc