Effect of R&D on firms? growth: discrepancy between sales growth and employment expansion

Donghyuk Choi (), Joseph Kang () and Chiyong Kim ()
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Donghyuk Choi: KISTEP
Joseph Kang: KISTEP
Chiyong Kim: KISTEP

No 401582, Proceedings of Economics and Finance Conferences from International Institute of Social and Economic Sciences

Abstract: In this paper, we analyze the effect of firms? R&D investment on sales growth and employment expansion. We attempt to shed light on the R&D investment effect by comparing the difference of R&D influence on these two growth dimensions. The estimation results of the panel fixed-effect model show that the previous year?s R&D investment has a significant and positive association with the current year?s sales growth but does not result in significant employment expansion. We also conduct a two-digit industry-level analysis based on the Korean Standard Industrial Classification (KSIC), using a quantile regression model, to examine how the discrepancy between sales growth and employment expansion differs between industries. Among various manufacturing industries, high-tech industries such as electronics are characterized by large discrepancies. Based on the estimation results, we discuss industrial policies for sustainable growth when a nation such as South Korea follows a high-growth strategy by increasing the rate of R&D investment.

Keywords: R&D; firm growth; sustainable growth (search for similar items in EconPapers)
JEL-codes: L25 O43 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2014-07
New Economics Papers: this item is included in nep-cse and nep-sbm
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Published in Proceedings of the Proceedings of the 2nd Economics & Finance Conference, Vienna, Jul 2014, pages 208-219

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Persistent link: https://EconPapers.repec.org/RePEc:sek:iefpro:0401582

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