R&D intensity and allocation: empirical evidence from Indonesia in AEC integration

To increase the competitiveness of ASEAN economy through ASEAN Economic Community (AEC), the role and strategy of R&D in spending alignment need to be revitalised. An understanding of the current R&D strategy of each AEC member country through the comprehensive analysis of R&D expenditure is also required. This paper addressed the issues of R&D expenditure and intensity in Indonesia that is currently placed at a relatively low position among other ASEAN members. The quantitative method was utilised to achieve the research objectives. The data, obtained from 228 companies of various sectors in Indonesia, were collected and integrated as the empirical basis for testing the hypotheses. The results suggested that although the growth opportunities and leverage have different effects on R&D intensity, the intensity effect is still very inadequate. Most companies allocated their R&D investment for internal purposes. They invested R&D expenditures to increase the efficiency of their companies even if it had low contribution to their company value.