The Impact of Cost Stickiness on R&D Investment and Corporate Performance: An Empirical Analysis of Japanese Firms

This study examines the impact of cost stickiness on research and development (R&D) investment and corporate performance in Japanese firms. Additionally, it investigates the moderating effect of managerial overconfidence and financial slack. To do so, we analysed a sample of 4877 observations from Japanese firms listed on the Tokyo Stock Exchange between 2014 and 2020. The results show that cost stickiness generally promotes R&D investment while negatively affecting corporate performance. Further, although managerial overconfidence does not moderate the relationship between cost stickiness and R&D investment, it weakens the negative effect of cost stickiness on corporate performance. Meanwhile, financial slack strengthens the positive impact of cost stickiness on R&D investment, but it does not moderate the relationship between cost stickiness and corporate performance. These findings provide strategic insights into resource allocation behaviour in driving innovation and influencing corporate outcomes in the Japanese market context.