Resilience of R&D of Multinational Companies: Insights of Two Crises

Abstract

This study investigates the R&D behavior of the world’s top R&D investors during the Great Financial Crisis and the COVID-19 crisis. Focusing on the resilience of corporate R&D activities, we explore two dimensions: stability and adaptability. Using two large datasets on the world’s leading R&D-investing companies covering the periods 2004–2010 and 2015–2021, thus including both crises, our analysis reveals substantial heterogeneity in how top global R&D-investing companies respond to economic downturns. Three patterns emerge: non-resilient companies (one-third), adaptive resilient companies that quickly recover after initial reductions (one-third), and stable resilient companies that maintain or expand R&D throughout crises (one-third). Remarkably, this distribution remains consistent across both crises, suggesting generalizable response patterns among leading MNEs. However, the mechanisms driving these responses differ between crises. Pre-crisis sales growth consistently emerges as the strongest predictor of stable R&D resilience in both crises, while pre-crisis profitability reinforces adaptive resilience, reflecting firms’ internal financing capabilities. Notably, resource reconfiguration capabilities—proxied by capital expenditure growth—positively influence stable resilience only during COVID-19, likely reflecting digital infrastructure investments that enabled distributed R&D operations under mobility restrictions. Conversely, both high pre-crisis capex intensity and low profitability significantly increase the likelihood of non-resilient behavior, particularly during the 2009 GFC. We also identify significant regional and industry effects that vary between the two crises.