The impacts of R&D spikes on performance: Evidence from US biopharmaceutical companies

Abstract

Based on a sample of 127 observations of US biopharmaceutical companies, this study investigates how research and development (R&D) spikes affect business efficiency. Firstly, the Directional Distance Dynamic Data Envelopment Analysis (DEA) model is adopted to evaluate the performance of US biopharmaceutical companies in year 2015. Then, ordinary least squares (OLS) regressions are used to explore the effects of R&D spikes (from 2011 to 2015) on corporate performance in year 2015. This research finds that R&D spikes have negative contemporaneous effects and time-lagged effects on corporate performance.