The return to the technological frontier: The conditional effects of plants’ R&D on their productivity in Finnish manufacturing

Petri Böckerman (), Eero Lehto and Janne Huovari

No 243, Working Papers from Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE

Abstract: This paper examines, through the use of plant-level data, whether R&D’s productivity impact is contingent on the distance of a plant’s productivity from the industry’s technological frontier. R&D is specified as an accumulated stock from R&D investments. We analyse the productivity effect of a plant’s own R&D as well as the productivity impact of the plant’s parent firm’s and other firms’ proximity-weighted R&D stocks. The results show that a plant’s own and a parent firm’s R&D have a positive productivity impact and that the former impact decreases as the distance from the industry’s technological frontier increases. Furthermore, the productivity effect of other firms’ proximity-weighted R&D is, on average, positive, but this impact increases in the distance from the technological frontier. Another important finding is that all the plants tend to converge towards the industry’s technological frontier despite the size of external R&D spillovers.

Keywords: productivity; efficiency; technological frontier; spillovers; convergence (search for similar items in EconPapers)
JEL-codes: D24 L00 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2008-09-01
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Working Paper: The return to the technological frontier: The conditional effect of plants’ R&D on their productivity in Finnish manufacturing (2008)
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