THE INFLUENCE OF R&D ON ORGANIZATIONAL PERFORMANCE: EVIDENCE FROM PAKISTAN’S TEXTILE INDUSTRY

Abstract

Innovation plays a critical role in enhancing competitiveness and fostering economic growth, particularly in developing economies such as Pakistan. Despite the acknowledged importance of research and development (R&D), its influence on the performance of textile firms in Pakistan remains underexplored. This study investigates the relationship between R&D investment and firm performance in the Pakistani textile industry. Using regression analysis, the study examines the return on assets (ROA) for 55 textile companies listed on the Pakistan Stock Exchange (PSX) over the period 2010–2018. Findings reveal that R&D investment significantly improves firm performance, with emerging firms benefiting more than established companies. Conversely, larger firms exhibit comparatively lower profitability, potentially due to operational inefficiencies. These results provide valuable insights for policymakers and industry stakeholders, emphasizing the need to encourage innovation and support smaller enterprises as drivers of growth in emerging markets.