{'fraction_non_alphanumeric': 0.023696682464454975, 'fraction_numerical': 0.0, 'mean_word_length': 5.03265306122449, 'pattern_counts': {'":': 0, '<': 0, '<?xml version=': 0, '>': 0, 'https://': 0, 'lorem ipsum': 0, 'www.': 0, 'xml': 0}, 'pii_count': 0, 'substrings_counts': 0, 'word_list_counts': {'cursed_substrings.json': 0, 'profanity_word_list.json': 0, 'sexual_word_list.json': 0, 'zh_pornsignals.json': 0}}
COMPLEMENTARITY EFFECTS OF R&D AND INFORMATION TECHNOLOGY ON FIRM MARKET VALUE

We empirically study the joint impact of R&D and IT investments on firm market value. The mixed evidence in the prior literature on the impact of R&D and IT on firm performance brings to mind new questions of whether R&D or IT alone are sufficient determinants of firm market value. As IT plays an increasingly critical role in the execution of innovation-intensive investments, it is important to understand the extent to which IT has transformed the execution and delivery of R&D. We argue that complementarities between R&D and IT spending will enable future growth options and allow innovation processes to become more effective. We estimate the interaction impact of IT and R&D investments on Tobin's q, a forward-looking measure of firms' market-to-book value. We test our empirical model on a recent multi-year, firm-level, archival dataset that spans multiple industries. Our results suggest that the interaction effect of R&D and IT on Tobin's q is positive and statistically significant after controlling for other firm-and industry-specific effects. Our study addresses a critical gap in the innovation literature which has ignored the possibility of interaction effects between R&D and IT and their impact on firm market value. Our results provide empirical support for recent anecdotal evidence with respect to manner in which IT is revolutionizing R&D-intensive innovation processes.