San Jose Business Daily

a business must reduce spending on product development and research in a prolonged recession period , why ?

it is adviced to spend less on these research so that cash outflow would also be reduced , however , if the economy recovers, sales might be damaged .

Public Comments

1. "If the economy recovers." That's a big if. Companies would all love to get a big jump on the competition as soon as the economy picks up, but in a prolonged recession it just isn't feesible to spend as much on research as you would during normal economic times or even a brief economic downturn. If a recession is prolonged, customers will tend to stay away no matter how much research is put in. Therefore, a company may have to wait a long time before they see any benefits of their extra spending on product development and research. If they have to wait too long, they could go bankrupt.
2. There are arguments on both sides of this issue. Read any business magazine/website like Harvard Business or Business Week and there are many articles on the subject. The common is wisdom, however, is to not stop product development during a recession. You may not be able to do big projects but you should keep momentum. From a personal perspective, it isn't healthy emotionally for you and your co-workers to stand still. It creates a depressing atmosphere where creativity will wilt and die. Try to choose smart projects that you can afford to implement.