Related diversification and R&D intensity dynamics

César Alonso-Borrego and Francisco Forcadell

Research Policy, 2010, vol. 39, issue 4, 537-548

Abstract: Using longitudinal data of Spanish manufacturing companies, we study the dynamic, bidirectional relationship between firm research and development (R&D) intensity and corporate diversification in an organic growth setting. Our empirical approach accounts for the different sources of endogeneity. Although we find a positive linear effect of R&D intensity on related diversification, the effect of related diversification on R&D intensity assumes the form of an inverted U. Thus, the effect of related diversification on R&D intensity is positive, but marginally decreases for moderate levels of related diversification. Such an effect can become negative, however, for high levels of related diversification. Additionally, as a consequence of dynamics, the effects after one year are substantially lower than the overall effects that occur over several years.

Keywords: Diversification; R&D; intensity; Dynamics; Organic; growth; Endogeneity; Panel; data (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:39:y:2010:i:4:p:537-548

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