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

Marco Capasso, Tania Treibich and Bart Verspagen

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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.

Keywords: Firm growth; R&D expenditure; Industrial dynamics; Quantile regression (search for similar items in EconPapers)
Date: 2015-02
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Citations: View citations in EconPapers (30)

Published in Small Business Economics, 2015, 45 (1), pp.39 - 62

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Related works:
Journal Article: The medium-term effect of R&D on firm growth (2015)
Working Paper: The medium-term effect of R&D on firm growth (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03604414

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