The effects of research and development (R&D) activities on firm performanceare fairly important in
developing countries in which they operate. Accordingly, this study aims to determine how firms performance is
affected by R&D expenditures, and this effect is tested and discussed with manufacturing firms data, which
range from 2007-Q1 to 2014-Q3 in Turkey, both by using Durbin-Hausman panel cointegration test developed
by Westerlund (2008) and Common Correlated Effects (CCE) coefficient estimator developed by Pesaran
(2006). The findings indicate that R&D expenditures have a positive effect on sales growth in the manufacturing
industry. Moreover, it has been found that this effect has continued for six months