Analysis of the correlation between the companies’ investment in research, development and profitability, and the countries’ competitiveness and innovation capability

Abstract

This study aims at analyzing the correlation between R&D investment percentage and the companies’ profitability percentage with the countries’ innovation competitiveness and capability scores. It also aims at identifying whether the companies which invest the most in R&D and the most profitable ones are located in countries with the highest levels of competitiveness and innovation capability. The indexes of R&D investment and companies’ profitability were extracted from the 2018 EU Industrial R&D Investment Scoreboard issue, and the scores for the countries’ competitiveness and innovation capability were extracted from the 2018 Global Competitiveness Report. The correlation between the variables were analyzed with the use of i) two-way ANOVA, to check the influence of two different categorical independent variables; ii) Tukey’s post-hoc test, to identify the position of the meaningful differentials. Four hypotheses were raised to analyze the interest correlations. After applying ANOVA in the correlations, it was possible to see that none of them were statistically significant. This study’s finding showed that the companies which invest the most in R&D and the most profitable ones are not necessarily located in countries that are the most competitive and which have the highest innovation capability scores, which goes against some studies that stated that company innovations are important for the development of the country where they are located. The fact the hypotheses were not confirmed makes the study relevant, for it confirms that new studies on companies’ innovation and competitiveness in the countries must be carried out.