THE TEXTILE INDUSTRY: DOES R&D DELIVER SUCCESS?

Abstract

Centuries of protection have impeded innovation in the textile industry. As these protections elapse, the industry must contend with increasing competition from abroad. This raises the question: will more R&D expenditure enhance competitiveness? To assess this, we measure firm profitability using Tobin's q, the ratio of the stock market valuation of the firm compared to the book value of the firm's assets. Q values are compared to other financial ratios, and then used to assess the impact of research and development (R&D) spending. A Mann‐Whitney rank test indicates firms that conduct R&D are not more profitable, as measured by q, than those that do not conduct R&D.

Citation

Christoffersen, S. (2002), "THE TEXTILE INDUSTRY: DOES R&D DELIVER SUCCESS?", Competitiveness Review, Vol. 12 No. 2, pp. 77-95. https://doi.org/10.1108/eb046444