The Impact of R&D on the Financial Performance of Russian Oil and Gas Companies

This study presents a comprehensive analysis of the impact of the intensity of research and development (R&D) costs on the financial performance of Russian oil and gas companies, including in the context of external sanctions pressure. To conduct an empirical analysis, a data panel was created covering 112 companies in the industry for the period from 2017 to 2023. For the econometric assessment, an improved two-step model based on the CDM approach (Crépon – Duguet – Mairesse) [1] is used, which allows solving the problem of endogeneity. At the first stage, the key determinants of the intensity of R&D costs, including return on assets, company size, and debt burden, are determined using a fixed-effect panel regression. At the second stage, the R&D intensity values predicted at the first step are used as an independent variable in the quantile regression model. This method allows us to analyze the impact of investments in innovation on the gross margin of companies with different levels of profitability (different distribution quantiles) and with time lags from 1 to 3 years. The results obtained demonstrate that an increase in the intensity of R&D costs has a statistically significant and positive impact on the financial performance of oil and gas companies within a year after investment, especially for firms with medium and high profitability. However, this effect does not persist in the medium term (with lags of 2 and 3 years). Such a rapid but short-term financial return indicates that until recently, R&D funds have been mainly used to purchase and implement ready-made imported technological solutions, rather than to create companies’ own breakthrough technologies. In addition, it was discovered that the inclusion of a company in the list of sanctioned entities is statistically significant and has a positive effect on its financial performance in the short term in certain groups in terms of profitability. The article makes up for the lack of empirical research on the financial impact of R&D in the domestic economy and highlights the vulnerability of the current innovation model of the sector.