International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

The Effects of Firms’ R & D Expenditures on Profitability: An Analysis with Panel Error Correction Model for Turkey
Murat KIRACI (Prof.), Ferdi CELIKAY (Ass. Prof.), Duygu CELIKAY (Research Ass.)

The purpose of this paper is to determine the impact of research and development expenditures on a firm’s shortand long-term profitability. A dynamic panel data analysis was carried out on data collected between 1998 and 2012 from a sample of 46 publicly traded manufacturing firms on the Borsa Istanbul. The findings revealed that although research and development expenditures do not have a statistically significant effect on the short-term profitability of a firm, they do have a significantly positive and strong effect on long-term profitability. It show that for a one-unit increase in research and development expenditure, the gross profit increases by 10.19 units, the net operating income increases by 2.37 units, and the net income increases by 1.39 units.

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