Understanding the complex relationship between R&D investment and firm growth: A chaos perspective

Time delays and feedback loops often introduce nonlinear, dynamic, chaotic, or disorderly business patterns. In this paper, we argue that a firm’s growth driven by R&D can also exhibit chaotic behavior, through a simple model, where R&D has two distinct impacts on its revenue through the demand-inducing and cost-increasing effects. On the basis of a revenue-based investment strategy with anchoring and adjustment, the firm’s growth dynamics are...