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The medium-term effect of R&D on firm growth

Marco Capasso (), Tania Treibich () and Bart Verspagen

Small Business Economics, 2015, vol. 45, issue 1, 39-62

Abstract: This study analyses the effect of R&D expenditure on firm employment growth in the medium term, using six cross-sectional waves of an innovation survey conducted in the Netherlands in all sectors. The analysis is focused on firms having positive R&D expenditure and investigates whether higher investments in R&D (in proportion to firm turnover) translate into higher medium-term growth rates. Comparisons with growth on a shorter term are conducted by following the firm size evolution since the R&D investment for five consecutive years and allowing for firm exit. At all time terms, quantile regression techniques indicate that a higher R&D has a positive effect on high growers and allows a higher number of firms to be high growers. Still, once a firm invests in R&D, even if a higher investment makes the firm more likely to have a very good performance, it does not make it less likely to have a bad one. Copyright The Author(s) 2015

Keywords: Firm growth; R&D expenditure; Industrial dynamics; Quantile regression; L20; L10; O32; L26 (search for similar items in EconPapers)
Date: 2015
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Working Paper: The medium-term effect of R&D on firm growth (2014) Downloads
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