Research and development expenses can serve as a surrogate measure of firm innovation.

Question

Quizplus · Accepted Answer

Research and development (R&D) expenses are typically invested into activities such as scientific and technological research, design, development, and testing of new products, processes or services. These activities are usually closely linked to innovation and can therefore serve as a good indication of a company's investment in new and innovative ideas and technologies.

Research and Development Expenses Can Serve as a Surrogate Measure