R&D and Non-linear Productivity Growth of Heterogeneous Firms

d'Artis Kancs and Boriss Siliverstovs

No 12-315, KOF Working papers from KOF Swiss Economic Institute, ETH Zurich

Abstract: The present paper studies the relationship between R&D investment and firm productivity growth by explicitly accounting for non-linearities in the R&D-productivity relationship and inter-sectoral firm heterogeneity. In order to address these issues, we employ a two step estimation approach, and match two rm-level panel data sets for the OECD countries, which allows us to relax both the linearity and homogeneity assumptions of the canonical Griliches (1979) knowledge capital model. Our results suggest that: (i) R&D investment increases rm productivity with an average elasticity of 0.15; (ii) the impact of R&D investment on rm productivity is dierential at dierent levels of R&D intensity { the productivity elasticity ranges from -0.02 for low levels of R&D intensity to 0.33 for high levels of R&D intensity; (iii) the relationship between R&D expenditures and productivity growth is non-linear, and only after a certain critical mass of R&D is reached, the productivity growth is signicantly positive; (iv) there are important inter-sectoral dierences with respect to R&D investment and firm productivity { high-tech sectors' rms not only invest more in R&D, but also achieve more in terms of productivity gains connected with research activities.

Keywords: R&D investment; Firm productivity; Generalised propensity score (search for similar items in EconPapers)
Pages: 29 pages
Date: 2012-10
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: R&D and non-linear productivity growth (2016)
Working Paper: R&D and Non-Linear Productivity Growth of Heterogeneous Firms (2012)
Working Paper: R&D and Non-Linear Productivity Growth of Heterogeneous Firms (2012)
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