In order to develop or protect competitive advantages, companies, besides other initiatives, increasingly invest more and more in research and development (R&D) to foster innovation and dynamic capabilities. Consequently, discussions about the effectiveness and benefit of R&D expenditure have become popular in the recent years. This paper is dealing with the topic "Does research pay? An analysis of R&D expenditure and economic performance in small and medium-sized enterprises (SME)." It was written in the second semester on the module of "Research Methods" to obtain a Master of Business Administration. In the first part, the theoretical basis for innovation management, calculation of benefit, evaluation methods of R&D initiatives in companies are given. The second part presents a quantitative analysis of the efficacy of R&D expenditure and economic performance of SME based on a data set produced from the Statistisches Bundesamt Germany by using MS Excel and the programming language "R." Finally, this assignment provides a summary, an outlook, and a recommendation for further research.