Relation of Firm Size to R&D Productivity

Jinyoung Kim, Sangjoon John Lee and Gerald Marschke
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Sangjoon John Lee: College of Business, Alfred University, U.S.A.
Gerald Marschke: Department of Economics, University at Albany¡XSUNY, U.S.A. NBER and IZA

International Journal of Business and Economics, 2009, vol. 8, issue 1, 7-19

Abstract: Many studies have shown that small firms generate more patents per R&D dollar than large firms. Does this mean that small firms are more efficient innovators than large firms? In this paper we exploit a unique data set to reexamine the firm size-innovation relationship. Because firm-reported R&D expenditures may be a biased measure of R&D activities due to under-reporting by small firms, we use the number of inventors in the firm¡¦s employ as a measure of R&D inputs. We focus on the pharmaceutical and semiconductor industries, two industries that are prolific generators of homogenous innovations. As has been found elsewhere in the literature, we find that patents per R&D dollar decline with firm size for both industries. This contrasts with the relationship between patents per inventor and firm size. The average number of patents per inventor increases with size in the semiconductor industry. In the pharmaceutical industry, we find no relationship between the number of patents produced per inventor and firm size.

Keywords: patents; innovation; labor productivity; research; firm size (search for similar items in EconPapers)
JEL-codes: J21 J24 O30 O32 O34 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Relation of Firm Size to R&D Productivity (2004)
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