The effect of R&D and export intensity on financial performance: An application on Turkey's Top 500 industrial enterprises

This study examines the relationship between R&D and export intensity with the financial performance of Turkey's largest 500 industrial enterprises. The study also investigates the impact of export intensity on the relationship between R&D and financial performance. The study analyzed 171 companies and 574 firm-year observations between 2012-2020 with panel data models. According to us, the analysis is critical because it is one of the studies to examine the relationship between R&D intensity, export intensity, and financial performance in a developing country like Turkey through HIGH-TECH and LOW-TECH sectors. The analysis results show that firms' R&D expenditures affect their financial performance negatively at the beginning, and this effect turns positive when R&D expenditures reach a certain level. In addition, we concluded that the export intensity did not have a statistically significant impact on the financial performance of the firms. In HIGH-TECH firms, the relationship between R&D intensity and financial performance is negative in the short run. However, this relationship becomes positive when R&D expenditures reach a certain level. In low-technology firms, there is no relationship between these variables. In the short term, a negative relationship between R&D intensity and financial performance is positively affected by the increasing export intensity, which causes a higher return on equity for HIGH-TECH firms, while LOW-TECH firms are not positively affected by the advantages provided by export intensity. Keywords: R&D Investment, Internationalization, High and Low Technology Sectors, Return on Assets, Return on Equity, ISO 500