Innovation Paradox and firm value in global Big Tech: Lag effects and the moderating role of profitability

Global Big Tech firms make enormous R&D and capital expenditures (CAPEX) to maintain technological hegemony. However, these investments can undermine firm value in the short term - a phenomenon known as the Innovation Paradox - and the conditions under which this paradox is mitigated have not been sufficiently elucidated. This study applied a two-way fixed-effects model with a hierarchical regression procedure to the panel data of eight major Big Tech firms between 2012 and 2024 to explore the differential time-lag structure by asset type, the moderating role of operating profitability, and the heterogeneity of value realization paths according to business models. As a result of the analysis, R&D and CAPEX were reflected in firm value at differential lags of 1 and 2 years, respectively, and a conditional mechanism was identified in which the negative (-) effect of innovation investment was substantially alleviated when operating profitability exceeds a certain level. In addition, this moderating pattern was differentiated between platform services and IT hardware groups. This study expands the complementary assets theory by identifying the mechanism by which innovation investments are conditionally valued in the multi-layered context of asset type, financial conditions, and business models, expands understanding of the value realization stage of open innovation, and provides meaningful implications for capital market evaluation and innovation policy design.