Volume 11, Number 3

CO-Evolution Between CCC-Driven Cash Flow Management and Transformation
of R&D – Amazon’S Endeavor

  Authors

Yuji Tou¹, Chihiro Watanabe^2,3, Pekka Neittaanmäki², ¹Tokyo Institute of Technology, Japan, ²University of Jyväskylä, Finland and ³International Institute for Applied Systems Analysis (IIASA), Austria

  Abstract

Amazon became the world R&D leader in 2017 by rapidly increasing R&D investment. The company’s extremely large amount of R&D funds is the result of an ample free cash flow generated by sophisticated cash conversion cycle (CCC) management. Increased R&D induced business advancement and lean cost structure construction leading to further increase in cash flow which has stimulated interaction between vendors, customers, and Amazon via the Amazon marketplace. Activated interaction accelerated CCC advancement, a subsequent free cash flow increase, and user-driven innovation, thus accelerated the transformation of routine and periodic alteration activities into significant improvement simultaneously. All of these components function together as a consolidated sophisticated machine.

In light of the increasing concern to R&D resources development without the dilemma of a productivity decline that most digital economies are now confronting, this paper demonstrated the above hypothetical view.

An intensive empirical analysis focusing on the development trajectory of Amazon’s techno-financing system over a period from 1997 to 2018 was conducted.

An insightful suggestion to neo open innovation that fuses financing management and R&D management was thus provided

  Keywords

R&D, Transformation, Cash flow management, Cash conversion cycle, Amazon