 Firm Growth and R&D ExpenditureAlex Coad () and Rekha Rao-Nicholson Papers on Economics and Evolution from Philipps University Marburg, Department of Geography Abstract: We apply a panel vector autoregression model to a firm-level longitudinal database to observe the co-evolution of sales growth, employment growth, profits growth and growth of R&D expenditure. Contrary to expectations, profit growth seems to have little detectable effect on R&D investment. Instead, firms appear to increase their total R&D expenditure following growth in sales and growth of employment. In a sense, firms behave ‘as if’ they aim for a roughly constant ratio of R&D to employment (or sales). We observe heterogeneous effects for growing or shrinking firms however, suggesting that firms are less willing to reduce their R&D levels following a negative growth shock than they are willing to increase R&D after a positive shock. Keywords: Firm Growth; Panel VAR; R&D expenditure; Industrial Dynamics Length 32 pages (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:esi:evopap:2007-10 Access Statistics for this paper More papers in Papers on Economics and Evolution from Philipps University Marburg, Department of Geography Deutschhausstrasse 10, 35032 Marburg. Contact information at EDIRC. |
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