Publication detail

The impact of innovation on the profitability of Slovak Pharmaceutical Companies

LEHENCHUK, S. TUMPACH, M. VYHIVSKA, I. MAKAROVYCH, V. LAICHUK, S.

Original Title

The impact of innovation on the profitability of Slovak Pharmaceutical Companies

Type

journal article in Web of Science

Language

English

Original Abstract

In conditions of the knowledge economy and innovations, research and development activities are among the most important factors affecting companies' financial performance. This study aims to investigate the impact of research and development activities on the profitability of Slovak pharmaceutical companies. The panel dataset consists of 37 sample pharmaceutical companies for 2015-2019. Panel data regression analysis was used as the main research method of the study. Profitability was measured with the return on assets indicator, chosen as the dependent variable. The independent variables are leverage, research and development intensity, research and development intensity squared, size, and high-tech dummy. The empirical analysis includes descriptive statistics, normality test, autocorrelation test, and panel regression models (random effect model) followed by F-statistics test, Hausman test, and Breusch-Pagan test. The hypothesis that there is a significant positive impact of research and development activities on the profitability of knowledge-intensive enterprises has been partly confirmed. Only the research and development intensity squared has a significant positive impact on the profitability of Slovak pharmaceutical companies at a 1% level. On the contrary, the research and development intensity has a significant negative relation. According to the analysis results, control variables (leverage, size, and high-tech dummy) have no significant influence on profitability. The existence of an inverted-U relationship between research and development activities and the profitability of Slovak pharmaceutical companies has been established. Investing in innovations of Slovak pharmaceutical companies has a positive effect on profitability only from a certain amount and has an upper limit on the amount of profitable investment. Thus, to formulate recommendations on the adjustment of investment policy in research and development activities, it is necessary to conduct future research to determine the entry points and exit points from the area of best profitability on inverted-U function.

Keywords

financial performance, pharmaceutical companies, profitability, research and development

Authors

LEHENCHUK, S.; TUMPACH, M.; VYHIVSKA, I.; MAKAROVYCH, V.; LAICHUK, S.

Released

30. 6. 2022

Publisher

Sumy State University

Location

Sumy (Ukraine)

ISBN

2227-6718

Periodical

Marketing and Management of Innovations

Year of study

13

Number

2

State

Ukraine

Pages from

284

Pages to

296

Pages count

13

URL

https://armgpublishing.com/journals/mmi/volume-13-issue-2/article-25/

BibTex

@article{BUT181473,
  author="Serhii {lehenchuk} and Miloš {Tumpach} and Iryna {Vyhivska} and Viktoriia {Makarovych} and Svitlana {Laichuk}",
  title="The impact of innovation on the profitability of Slovak Pharmaceutical Companies",
  journal="Marketing and Management of Innovations",
  year="2022",
  volume="13",
  number="2",
  pages="284--296",
  doi="10.21272/mmi.2022.2-25",
  issn="2227-6718",
  url="https://armgpublishing.com/journals/mmi/volume-13-issue-2/article-25/"
}