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Determinants of R&D investment under Uncertainty: An Empirical Study of Saudi Firms
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Orientador(es)
Resumo(s)
This study aims to examine the financial determinants of research and development (R&D) investment in Saudi industrial firms, with particular emphasis on periods of economic crises. The 2008 Global Financial Crisis and the COVID-19 pandemic are employed as representative examples of major economic shocks to assess firms’ innovation responses. To achieve this objective, the analysis incorporates firm-specific variables using panel data for a sample of thirty industrial firms over the period 2007–2020. The sample selection is based on firms’ strategic engagement in R&D activities and the critical contribution of the industrial sector to the national economy. The dataset, covering fourteen years, was compiled from audited financial statements of the selected firms, obtained from their official websites. The study adopts a purposive sampling approach and an explanatory (causal) research design, employing quantitative data within a multiple regression framework. Using STATA for empirical analysis, the study utilizes one dependent variable R&D investment, measured as the ratio of R&D expenditure to total assets and eight independent variables: cash , sales growth rate, gross profit from sales, return on assets, return on equity, internal financing rate, external financing rate, and the debt-to-equity ratio. The results reveal a statistically significant positive relationship between sales growth rate, gross profit from sales, return on assets, and internal financing, and R&D investment. Conversely, the findings indicate a negative relationship between cash holdings, return on equity, external financing, and the debt-to-equity ratio, and R&D investment.Although crises explains only a small share of R&D variation (R² ≈ 13%), financial variables consistently demonstrate far greater explanatory power ( 87%), confirming that firms’ financial conditions are the key drivers of R&D investment in times of economic turmoil. Finally, the study recommends that Saudi industrial firms adopt optimal business portfolio diversification strategies to reduce exposure to crisis-related risks and mitigate their adverse effects. To enhance their investment portfolios, firms should move beyond traditional income sources and diversify into alternative, non-interest-based revenue streams.
Descrição
Palavras-chave
R&D Financial Determinants Financial Performance
Contexto Educativo
Citação
Saif, A. A. A., An, N. N. M., Mohammed, M. A. M., Abduljalil, A. M. A., Altahery, A. A. A., Abdullah, A. A. A., & Dawood, M. M. S. G. (2026). Determinants of R&D investment under Uncertainty: An Empirical Study of Saudi Firms. Dutch Journal of Finance and Management, 9(1), 40784. https://doi.org/10.55267/djfm/18559