It's a tough call. When a company is private but no longer small, that can be a great time to get research underway, since as you note, Lin, there isn't anyone waiting to see an immediate payback and profit.
At the same time, the lure of profit can be tough for founders and other inital stakeholders to resist.
I suppose whether a company can continue to innovate depends on how well it does overall. Look at Google; it continues to innovate --and throw away a lot of what doesn't work -- and while shareholders squawk, they haven't done anything to stop it.