Empirical Study on the correlation between Research and Development Investment and Business Performance in Traditional Chinese Medicine Industry

Abstract

— The traditional Chinese medicine (TCM) industry is one of China’s unique industries that have international comparative advantages, which gain key support from the government. Financial data of 42 listed TCM companies on the A-share market from 2012 to 2019 are picked out as sample data, and correlation analysis, multiple linear regression analysis, and lag analysis are conducted. Research shows that research and development (R&D) investment of TCM companies in the A-share market is positively correlated with business performance. Therefore, it is suggested that TCM companies should increase investment in R&D, strengthen industry-university-research collaboration, and that the government should strengthen their protection of intellectual property and promote the sustainable and healthy development of the TCM industry.