Decision making under uncertainty? R&D activity and market value during financial crisis

Christos Sofronas (EFG Eurobank Ergasias SA, Athens, Greece)
Fragiskos Archontakis (School of Economics, Business Administration & Legal Studies, International Hellenic University, Thermi, Greece)
Palie Smart (Department of Management, University of Bristol, Bristol, UK)

European Journal of Innovation Management

ISSN: 1460-1060

Publication date: 19 June 2019



In the research & development (R&D) and innovation management literature, the question of whether or not to perform research in the private sector is always a pertinent one. Several studies have used market value to measure its association with a firm’s R&D performance. Nevertheless, in Europe there have been considerably less studies as compared to the USA because the analysis is complicated by data issues and different country-specific laws. The purpose of this paper is to further advance this field of research. The study provides insights into the strategic decision behind conducting R&D.


The econometric analysis is based on a unique panel data set of 133 companies in 13 European countries which is collected from the Bloomberg database covering the time period from 2002 to 2012.


The empirical findings are as follows: there is weak evidence in support of the hypothesis that R&D expenditure positively affects the firm’s market value, a fact which is confirmed by other published works; there is weak evidence that economic events can disrupt the connection of R&D programs with the market value of firms; and for a highly controversial topic in the literature, data suggest that small firms are rather favoured more from R&D expenditure than large firms.


The current study expands the discussion regarding the effect of R&D on the market value of firms via empirical evidence, within the specific environment of the European financial crisis. Future managerial, informed-based, decisions can be drawn on the present results.



Sofronas, C., Archontakis, F. and Smart, P. (2019), "Decision making under uncertainty? R&D activity and market value during financial crisis", European Journal of Innovation Management, Vol. ahead-of-print No. ahead-of-print.

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