Innovation, Firm Size, and R&D Search

Jose Plehn-Dujowich ()
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Jose Plehn-Dujowich: University at Buffalo

Economics Bulletin, 2007, vol. 12, issue 18, 1-8

Abstract: We present evidence that small firms perform two to four times more innovations per dollar of R&D than large firms. We propose a search theory of R&D that accounts for the evidence. A firm incurs R&D expenses until it has discovered a level of R&D productivity that is sufficiently great to warrant stopping the search. We show that because the large number of R&D projects run by a large firm becomes a substitute for enhanced R&D productivity, the average R&D productivity of a firm is decreasing in firm size.

JEL-codes: L2 O3 (search for similar items in EconPapers)
Date: 2007-08-31
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Citations: View citations in EconPapers (1)

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