How Does R&D Investment Influence Firm Innovation Quality? The Mediating Roles of Knowledge Absorption and Transformation Capabilities
Year: 2026
Type: article
Abstract: This study examines the impact of research and development (R&D) investment on firm innovation quality and further investigates the mediating roles of knowledge absorption capability and knowledge transformation capability. Although R&D investment is widely recognized as a key driver of technological progress and corporate innovation, the relationship between innovation input and innovation quality is not necessarily direct. The extent to which firms can identify, acquire, absorb, integrate, and transform external and internal knowledge may determine how effectively R&D resources are converted into high-quality innovation outcomes. Therefore, this study aims to clarify the underlying mechanisms through which R&D investment contributes to improvements in firm innovation quality and to identify whether these effects differ across firms with different ownership structures and industry characteristics. This study contributes to the existing literature by opening the black box between R&D input and innovation quality and highlighting the importance of knowledge-related capabilities as mechanisms connecting innovation investment with innovation outcomes also provides empirical evidence for understanding the conditions under which investment generates greater innovation value. Firms should not focus exclusively on increasing R&D expenditure but should also strengthen their knowledge absorption, integration, and transformation capabilities. The findings provide empirical support for promoting a transition from innovation quantity innovation quality improvement.
Authors: Yeong Hong Yi, Dewi Purwati
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7225720503