The primacy of innovation in strategic financial management-understanding the impact of innovation and performance on capital structure

摘要

This paper intends to determine the impact of pursuing a strategy for innovation on capital structure decisions and performance. It builds on the R&D management research which is country-focused and utilizes an international sample. This is significant when considering the sample of the study. While past studies have focused on single country samples, this study utilizes the most innovative firms in the world, thereby raising a new aspect in the innovation theory. Interestingly, this study finds that directionality of leverage, R&D investment and performance relationships observed appear to be contrary to existing research. This is attributed to the cross-country characteristics within the sample. This study differs from existing research by indicating variations in patterns of advertisement intensity and R&D investment across countries, as well as variations in patterns of innovation scores and business sophistication. Future research may explore the country characteristics associated with firms that pursue a strategy for innovation.