The role of R&D in new firm growth

Erik Stam and Karl Wennberg ()

No 2009-004, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: Innovative start-ups are an important driver of economic growth. This article presents empirical evidence on the effects of R&D on new product development, inter-firm alliances and employment growth during the early life course of firms. We use a dataset that contains a sample of new firms that is representative for the whole population of start-ups. This dataset covers the first six years of the life course of firms. R&D reveals to play several roles during the early life course of high tech as well as high growth firms. The effect of initial R&D on high tech firm growth runs via increasing levels of inter-firm alliances in the first post-entry years. R&D efforts enable the exploitation of external knowledge. Initial R&D also stimulates new product development later on in the life course of high tech firms, but this does not seem to affect firm growth. R&D does not affect the growth rate of new low tech firms, which seems to be driven mainly by the growth ambitions of the founding entrepreneur. The results show that R&D matters for a limited but important set of new high tech and high growth firms, which are key in innovation and entrepreneurship policies.

Keywords: New Firms; Innovation; R&D; firm growth; alliances; product development (search for similar items in EconPapers)
JEL-codes: D21 L23 L25 L26 M13 (search for similar items in EconPapers)
Date: 2009-01-12
New Economics Papers: this item is included in nep-com, nep-cse, nep-ent, nep-ino, nep-ipr, nep-pr~, nep-knm, nep-mic and nep-tid
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Journal Article: The roles of R&D in new firm growth (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2009-004

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