Product Market Competitive Threats and Firm Value: The Moderating Role of R&D Capability

Studies on the adverse effects of product market competition (PMC) on firm value often lack mitigation strategies. Our study explores the mechanism of how research and development (R&D) capability works as a tool to reduce the negative impact of PMC on firm value. We argue that PMC helps firms alter the characteristics of R&D capability: value, rarity, inimitableness, organization, and the ability to generate sustainable competitive advantage, ultimately impacting firm value. Results show that R&D capability mitigates the negative impact of PMC and enhances firm value.