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Firm R&D, Innovation, and Productivity in German Industry

Van Anh Vuong, Bettina Peters (), Mark Roberts () and Helmut Fryges

Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: This paper investigates empirically rm investment behavior in research and development (R&D). Firms make investments in R&D in order to produce innovations. These innovations in turn improve the rm s future productivity level, pro tability and incentives to invest in R&D. Using German rm-level data from the manufacturing sector, we estimate a dynamic, structural model of the rm s choice to invest in R&D and quantify the bene t and cost of engaging in R&D. We nd that among rms that engage in R&D, process and product innovations create a signi cant improvement in their productivity. The cost for performing R&D differs across rms based on their size and R&D history. We compute the bene ts of R&D investment to the rm and nd that by taking the dynamic nature of the investment into account the real return to R&D is several times higher than the one time gain in rm productivity.

JEL-codes: L60 O31 O32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cse, nep-eff, nep-ind, nep-ino, nep-sbm and nep-tid
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
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