R&D intensity and business performance: The case of Thailand’s maize seed industry

Abstract

The seed industry has been accorded a high priority in Thailand’s policies toward the fourth industrial revolution. The competitiveness of the seed sector can facilitate farmers’ access to quality seeds at a reasonable price, stimulate growth in the agricultural economy and, overall, contribute to sustainable agriculture development.  Developing the seed sector relies on many factors, an essential one being technology.  Thus, the technological capability of seed companies is crucial as it enables a higher business performance, which increases and sustains the contribution of the seed industry to economic development. The paper’s focus on the maize seed industry draws justification on its export value being the highest of all seeds exported from Thailand. The industry is dominated by multinational companies (MNCs) while local companies are at the early stage of development. This paper compares research and development (R&D) investment and the business performance between MNCs (both foreign subsidiaries and Thai-parent) and local small and medium-scale enterprises (SMEs). The results show that MNCs have higher investment in R&D, both in capital investment and human resources, and perform better. With a smaller investment in R&D, local SMEs have less technological capability and lower business performance than MNCs. On the other hand, a local research company showed an outstanding performance on return on sales. These findings suggest that Thai companies have a high potential for improvement in technological capability and business performance.  To achieve this, they require support from the government and academic institutions in human resource development and enabling regulatory framework.