Impact of the R & D Investment on Economic Performance of SMEs: The Case of the European Union Countries

Abstract

R & D expenditure is a very important phenomenon in development of the countries. Intense competition and advances in technology, direct the countries to increase their investment in R & D. Prosperity and living standards in a country can rise in case of the increase in productivity and competitiveness. Accordingly, R & D expenditures one of the most important instruments of economic growth, expanding employment and increasing the added value of the countries. The aim of this study is to examine the effect of innovation investment of SMEs on economic growth. R&D investments and SME sales data of 21 member states of the European Union covering the years 2007-2014 were adressed in the study. Data is examined using panel regression analysis and results of the analysis has shown that R&D activities have a significant contribution to economic performance of SMEs.