ABSTRACT
The bottom line, as shown in the most published accounts, is regarded by analysts as the best tangible evidence of what a company has achieved, and therefore a sensible guide of what it can achieve. Needless to say, Research and Development (R&D) activities are a priori suspect to all bottom-liners: the amounts to be spent are large and uncertain, the probability of success is unknown and the prospects of exploitation are dubious. For this reason, many companies prefer others to take the risk of investing in R&D and are content to be followers, and to copy the pioneers, once the new technology or product has proved itself. This policy of risk averseness is undoubtedly beneficial in its impact on the bottom-line in the short term, but in some cases the long-term effects – for example, in the pharmaceutical industry – may prove to be catastrophic, when the competitors succeed in cornering the market with brand-new products.
