"Isn't this contradictory? Having a low margin business by definition should mean that you have a smaller cash flow available to fund your R&D?" Not always. It

"Isn't this contradictory? Having a low margin business by definition should mean that you have a smaller cash flow available to fund your R&D?" Not always. It depends on how consumers react to the price of your products. A drop in profit per unit (by lowering one's price) might yield a large enough increase in units sold such that the total profit is higher. This is especially important for retailers who can't price discriminate easily.