Does investing more in Research and Development (R&D) always lead to greater innovation? Surprisingly, the answer is no. A detailed study of 760 Finnish firms reveals a more nuanced picture. At the lower end, companies struggle to benefit from R&D due to limited innovation capabilities and inefficient spending. At the top end, excessive R&D can actually backfire, causing overcrowded product development and overwhelming teams, leading to diminishing returns. The real sweet spot lies in the middle tier, where R&D spending effectively fuels growth, boosts innovation, and drives sales. But it’s not just about how much you spend — where and how you innovate matters too. High-tech manufacturers tend to see the biggest gains, while traditional sectors experience less impact from R&D investments. Additionally, industries with stronger innovation protection mechanisms enjoy higher returns. The key takeaway? Don’t just pour money into R&D. Instead, focus on building the right capabilities, targeting the appropriate stage and scale, and crafting a smart strategy. Strategy truly is king when it comes to turning R&D into competitive advantage. For a deeper dive, check out the full study titled "The Inter Thin Air: Using a Quantile Regression Approach to Explore the Relationship between R&D and Innovation," published in the International Journal of Applied Economics.