A possible surrogate measure of firm innovation is
A)ROA or ROE.
B)R&D expenditures.
C)Advertising as a percentage of sales.
D)None of the above

Question

Quizplus · Accepted Answer

R&D expenditures are a commonly used measure of firm innovation as they represent the resources a firm is dedicating specifically to the development of new products, processes, and technologies. ROA and ROE measure profitability and efficiency, respectively, while advertising as a percentage of sales only provides information on a firm's marketing strategy and may not necessarily reflect innovation. Therefore, the best choice for a surrogate measure of firm innovation is B.

A Possible Surrogate Measure of Firm Innovation Is