01812nas a2200181   4500008004100000245009600041210006900137260000900206300001300215490000700228520116600235653003201401653001701433100002101450700001901471700001701490856012301507       2003                        eng d00aThe Return on R&D Versus Capital Expenditures in the Pharmaceutical and Chemistry Industies0 aReturn on RD Versus Capital Expenditures in the Pharmaceutical a  c2003  a141 -1500 v503 aThe impact of research and development (R&D) on firm performance is generally agreed to be positive, but the nature and extent of this impact share little agreement in the previous research. Using an improved, time series, cross-sectional regression model that accounts for both contemporaneous and firm-specific serial correlation, as well as the feedback between firm profitability and investments, our study compares the rate of return from a dollar investment on R&D to a dollar investment on fixed assets in pharmaceutical and chemical industries. We find positive associations of R&D intensity and all variables of firm performance (net margin, operating margin, sales growth, and market value). We find that an investment in R&D earns an operating margin return much higher than the industry cost of capital. We also find that the effect of an investment in R&D on the firm's market value is about twice as much the effect of an investment in fixed assets. These findings have implications for corporate investment strategies, indicating that additional R&D investment is more likely to provide a firm with a unique and sustainable competitive advantage.10aStrategy & Entrepreneurship10aSupply Chain1 aHsieh, Ping-Hung1 aMishra, C., S.1 aGobeli, Dave  u/biblio/return-rd-versus-capital-expenditures-pharmaceutical-and-chemistry-industies-0