Enhancing R&D investments through investment efficiency in multi-business firms: the roles of cash holdings and growth opportunities

This study examines the influence of investment efficiency on augmenting R&D investment in multi-business firms, considering the moderating effects of cash holdings and growth opportunities. Drawing on a dataset extracted from the Historical Segment and Compustat databases, this research focuses on multi-business firms. The findings reveal a positive correlation between investment efficiency and R&D investment in multi-business firms. It is further discovered that cash holdings and growth opportunities positively moderate the relationship between investment efficiency and R&D activities. Notably, growth opportunities significantly strengthen this relationship, especially in cash-rich multi-business firms. This paper is the first to demonstrate that investment efficiency boosts innovation directly in multi-business firms with robust liquidity and growth opportunities, providing valuable insights compared to prior findings.