R&D Investment's Threshold Effect on Firm Performance

Based on the related data of listed companies in China's smart cities from 2011 to 2015, by means of panel threshold regression technique, this paper makes an empirical study of R&D investment's heterogeneous threshold effect on firm performance. The results show that:(1)R&D investment has an obvious nonlinear inverted U-type influence on firm performance, and only modest R&D input could promote firm performance, while if the investment is excessive, it could generate an inhibitory effect;(2) Constrained by enterprise scale, R&D input's effect on firm performance is featured by nonlinear U-style. Thus, it can be seen that only when the enterprise scale goes above a certain threshold, R&D investment can advance firm achievement;(3)Under the threshold of capital structure and the threshold of capital density, R&D input has a significant inverted N-type and nonlinear N-style effect on firm performance. At the same time, the optimal capital structure and capital intensity level range could be identified;(4) Under the ‘New Norm’, to further activate R&D input's positive effect on firm performance, we must grasp these key points-to pay equal attention to both R&D and management capability, to further strengthen and expand enterprise development, and to keep the modest capital structure and higher capital density level.