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R&D, Advertising and Firms’ Financial Performance in South Korea: Does Firm Size Matter?

School of Management, Qingdao Agricultural University, Qingdao 266109, China
Korea University Business School, Korea University, Seoul 02841, Korea
College of Economics & Management, South China Agricultural University, Guangzhou 510642, China
Author to whom correspondence should be addressed.
Sustainability 2019, 11(14), 3764;
Received: 17 June 2019 / Revised: 6 July 2019 / Accepted: 7 July 2019 / Published: 10 July 2019
(This article belongs to the Special Issue Innovation and the Development of Enterprises)
PDF [538 KB, uploaded 10 July 2019]


Advertising and research and development (R&D) are two engines for firms to obtain competitiveness and improve profits. This study develops a system of equations to investigate the overall relationships among R&D, advertising and financial performance across firm sizes. Data from Korean listed firms have been used during 2012–2016. First, our results show that R&D and advertising are complementary in South Korea. Second, for large firms, advertising is positively and significantly associated with financial performance, and the R&D expenditure has no significant influence. Finally, R&D and advertising expenditures have a negative impact on the financial performance of small firms. An additional analysis is conducted to examine the duration of R&D and advertising. Our results from Korean listed firms contain important implications for academia as well as practitioners. View Full-Text
Keywords: R&D expenditure; advertising expenditure; financial performance; firm size R&D expenditure; advertising expenditure; financial performance; firm size

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Xu, J.; Liu, F.; Chen, Y.-H. R&D, Advertising and Firms’ Financial Performance in South Korea: Does Firm Size Matter? Sustainability 2019, 11, 3764.

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