Assessing the Impact of Military and Civilian R&D on Performance

Francisco Callado-Muñoz, Marta Fernández-Olmos, Marisa Ramírez-Alesón and Natalia María Utrero-González

Defence and Peace Economics, 2024, vol. 35, issue 6, 760-776

Abstract: The aim of this paper is to evaluate the effects of civilian, military and dual (both military and civilian) R&D investments on the profitability of firms. In particular, this paper analyses the role of different types of R&D investment in a sample of firms that collaborate with the Spanish Ministry of Defence. This database contains detailed information about the R&D activities taking place and accounting and financial information. Our final sample consists of 935 observations from 158 firms during the period 2011-2018. The methodology used is the Generalised Method of Moments. The results show that military R&D is more significant than civilian R&D in explaining the financial firm performance in the Spanish defence industry. Moreover, they reveal differences between military and dual R&D and suggest the increasing importance of duality technologies. Finally, taking on board market segment idiosyncrasies does not eliminate, but reinforces, the differences observed. These results help to better understand the effects of R&D expenditure in the Spanish defence sector and are relevant in the current debate about reinforcing European defence capabilities.

Date: 2024
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DOI: 10.1080/10242694.2023.2197308

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