The Influence of R&D Intensity on Financial Performance: The Mediating Role of Human Capital in the Semiconductor Industry in Taiwan

Abstract

Knowledge transfer is a strategy used by high-tech companies to acquire new knowledge and skills. Knowledge can be internally generated or externally sourced. The access to external knowledge is a quick fix, but the risks associated with reliance on external sources are often overlooked. However, not acquiring such knowledge is even riskier. There have been a slew of litigations in the semiconductor industry in recent years. The acquisition and assurance of intangible assets is an important issue. This paper posits that internal R&D should take into consideration the knowledge intensity and capital investment in the industry. This study focuses on the relationship between intangible assets and financial performance. It sourced the 2004 to 2016 financial data of semiconductor companies in Taiwan for panel data modeling and examined case studies for empirical validation. This study found that the higher the R&D intensity (RDI) in the value-added component of human capital, the better the financial performance of the company. RDI has a positive influence on the accumulation of human capital and financial performance metrics, and such influence is deferred. Meanwhile, human capital is a mediating factor in the relationship between RDI and financial performance. RDI is integral to the semiconductor industry’s pursuit of business sustainability.

Intellectual capital and firm efficiency of US multinational software firms

“…This is evident by the results of I1 compared to the insignificant results of I2 (β 5 6.963 and β 5 8.156 respectively). This is in accordance with the theoretical assumption of deferred effect of R&D by Chen et al (2019) and the results of Chen and Wu (2020) who find that the effects of R&D are deferred in the knowledge transfer process of semiconductor companies in Taiwan. The results also support the findings of Song et al (2019) who find that R&D investments have a positive influence on company performance.…”

“…This is in accordance with the theoretical assumption of deferred effect of R&D by Chen et al . (2019) and the results of Chen and Wu (2020) who find that the effects of R&D are deferred in the knowledge transfer process of semiconductor companies in Taiwan. The results also support the findings of Song et al .…”

“…However, investing in R&D is costly and this may be challenging for smaller firms. Furthermore, R&D spending is a long-term investment that happens in stages (Chen and Wu, 2020). R&D expenses in the current period will have a negative or no impact on the current period sales but a positive effect on sales in the impending period.…”

“…The first element of IC is human capital (HC). HC is one of the most important internal resources in a company that drives innovation, profitability and competitiveness (Chen and Wu, 2020). Research shows that employees with better human capital can perform different tasks, are more creative, stay in the organization longer and go an extra mile over and beyond their standardized duties (Kengatharan, 2019).…”

Determining factors of financial performance of agricultural listed companies in China

“…,Zhu et al (2017),Xu and Sim (2018), andChen and Wu (2020).Export intensity reflects international competitive structure of a firm(Sophia and Gayathri, 2018) Jelena et al (2018). proved a positive relationship between export and the performance of agricultural companies.…”