The effects of R&D intensity and tax incentives on firms’ growth - empirical evidence from world's top R&D spending firms between 2003 and 2012

Tiago Soares (), Samuel Pereira () and Elísio Brandão ()
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Tiago Soares: FEP-UP, School of Economics and Management, University of Porto
Samuel Pereira: FEP-UP, School of Economics and Management, University of Porto
Elísio Brandão: FEP-UP, School of Economics and Management, University of Porto

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: R&D expenditures made by companies, and governmental policies oriented for the promotion of these expenditures in the private sector, are nowadays considered variables that have an impact on firms’ growth in the medium term. This study aims at understanding the simultaneous influence of R&D investment and R&D tax incentives on firms’ growth, for different technological and knowledge-intensity industries. For that, a panel data of 1127 firms belonging to 35 different industries from 21 OECD countries, during the period between 2003 and 2012, was used. The results of the econometric estimation confirm, as foreseen in the literature, the positive effect for firms’ net sales growth of their investment in R&D and of tax policies that benefit the firms which perform these types of activities, particularly in high-tech firms. The results also returned a positive effect of R&D intensity in firms’ growth in the period before crisis (2003 - 2007) and a negative and significant crossover effect of R&D tax credits and R&D intensity in firms’ growth for the period before crisis. The two factors remain insignificant in crisis period, suggesting that other factors gained a more powerful explanation of a firm’s growth in that period.

Keywords: R&D investment; R&D tax credits; firm’s growth (search for similar items in EconPapers)
JEL-codes: H20 H30 H81 O32 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2014-07
New Economics Papers: this item is included in nep-acc, nep-cse, nep-ino, nep-knm, nep-pbe and nep-sbm
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Citations: View citations in EconPapers (1)

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