Exploring the Sources of Firm-level Scale Economies in R&D: Complementary assets, internal and external knowledge inflows, and inventor team size

Sadao Nagaoka and Hideo Owan

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This paper explores the sources of firm-level scale economies in R&D, based on unique project-level data from a new large-scale survey of Japanese inventors, matched with firm-level data. We focus on four sources: complementary assets, internal and external knowledge inflows, and inventor team size. Major findings include: (1) a larger firm tends to generate more patents from a research project but not more valuable patents, controlling for the objectives and the R&D investment (inventive efforts) for the project; (2) the sales of a firm rather than its R&D (or patent stocks) significantly affects the number of patents from the project, suggesting that the main source of such scale economy is not internal knowledge inflow but "appropriation advantage" of a large firm; (3) an inventor in a large firm often gains important knowledge for the project from internal knowledge inflow as well as from scientific literature. However, the performance of R&D-for which internal knowledge is important-tends to be low; and (4) the size of inventor teams increases with firm size and technological diversity. A larger team size is significantly associated with higher patent value and, as such, the size of the inventor team is one source of firm-level scale economies.

Pages: 41 pages
Date: 2011-04
New Economics Papers: this item is included in nep-ino, nep-ipr, nep-pr~, nep-knm, nep-ppm, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:11038

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