You're both missing the point. I'm not saying that's the decision tree in 100% of cases, and those single decisions are the only single action they will take. I'm talking about incentives, which type of action brings the best bang for buck. The r&d becomes necessary only after it's no longer possible to compete just with costs and marketing.

Of course competition [also] incentivizes development and building better products, but that's secondary, not the reason companies exist. The primary motive is to make money. A not insignificant percent of businesses will try to employ the easiest way to get there, which is the smart business decision, and that's where the decision tree comes in.

https://capseecenter.org/comparing-c...ollege-sector/
http://www.huffingtonpost.com/davidh..._14064182.html