Technological opportunities can provide the firms with a competitive advantage in transforming their products and production processes The accumulation of competencies determines the possibility of responding to technological opportunities Thus, the amount of investment for a firm’s R&D endeavor can determine the accumulation of its technological competencies which in turn determines its technological opportunities and firm innovation. As a result, a firm’s investment on R&D activities is an important source for firm innovation. A number of studies suggest that a firm invests R&D activities continuously can foster the firm’s innovativeness also asserts that a higher level of R&D capacity improves a firm’s ability to exploit sources of knowledge. Therefore, a higher R&D investment can result in a higher firm’s innovativeness. Prior studies find that R&D investment has a positive relationship with a firm’s innovativeness
For instance, asserts that internal R&D reveals the opportunity for a firm’s dynamic improvement and innovation while find that there is a positive relationship between research efforts and research productivity in the pharmaceutical
industry.