Exploring the Relationship between Market Expansion and Corporate Innovation: The Mediating Role of Corporate Investment

Abstract

This research delves into the dynamic interplay between market expansion and corporate innovation, underscoring the critical mediating role of corporate investments. In the backdrop of globalization and informatization, we explore how expanding into new markets drives firms to innovate, enhancing their competitive edge and market reach. Utilizing a robust dataset from Wharton Research Data Services encompassing 3838 North American companies from 2013 to 2023, we employ quantitative analysis and empirical methods to dissect these relationships. Our findings reveal that while market expansion directly necessitates and benefits from innovation, corporate investments in R&D significantly bolster this process by efficiently allocating resources to foster innovation and market penetration. Moreover, the research examines various factors such as corporate governance, financial health, and external market conditions that influence these dynamics, offering a comprehensive understanding of the strategies that companies can employ to sustain growth and innovation in a competitive landscape.