A Reprise of Size and R&D

Wesley M Cohen and Steven Klepper

Economic Journal, 1996, vol. 106, issue 437, 925-51

Abstract: Numerous studies have shown that, within industries, the propensity to perform R&D and the amount of R&D conducted by performers are closely related to the size of the firm, while R&D productivity declines with firm size. These findings have been widely interpreted to indicate that there is no advantage to large firm size in conducting R&D. The authors show how a simple model based on the idea of R&D cost spreading can explain the prior findings about the R&D-firm size relationship, as well as additional features of the R&D-firm size relationship, implying an advantage to large size in R&D. Copyright 1996 by Royal Economic Society.

Date: 1996
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