DOES R&D PROTECT SMES FROM THE HARDNESS OF THE CYCLE? EVIDENCE FROM SPANISH SMES (1990-2009)
Dolores Añón Higón,
Miguel Manjon Antolin (),
Juan A. Mañez and
Juan A. Sanchis-Llopis
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Dolores Añón Higón: Department of Applied Economics II and ERICES, Universitat de València
Juan A. Sanchis-Llopis: Department of Applied Economics II and ERICES, Universitat de València
Authors registered in the RePEc Author Service: Juan A. Sanchis Llopis ()
No 1411, Working Papers from Department of Applied Economics II, Universidad de Valencia
This paper analyses whether undertaking R&D activities allows SMEs to attenuate the negative impact of recessions on productivity. In contrast to other studies we use a firm level indicator of the cycle based on firms’ own perceptions, while total factor productivity is obtained using a control function methodology in which we recognise the potential role that R&D experience might have in shaping future firms’ productivity. The analysis is performed using a representative sample of Spanish SMEs for the period 1990-2009. Results show both that R&D activities render positive productivity returns, and that performing R&D helps to alleviate the negative effects of downturns on productivity. Additionally, R&D seems to have a countercyclical effect upon SME’s productivity over the business cycle, as we find that SMEs R&D productivity premium in recessions doubles that of expansions.
Keywords: TFP; business cycle; R&D (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eec:wpaper:1411
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