Innovation

Innovation Does Pay Off: If You Measure Correctly

Date Added: Jul 2009
Format: PDF

Innovation is probably one of the most important forces fueling the growth of new products, sustaining incumbents, creating new markets, transforming industries, and promoting the global competitiveness of nations. However, some critics assert that an earnings-focused, short-term orientation on boosting stock price may undercut investments in innovation that typically have a long payoff. These critics assume that stock markets respond positively to announcements of immediate earnings but negatively to announcements of investment in innovation that have an uncertain long-term payoff.