Division of labor in R&D? Firm size and specialization in corporate research

Becker, A., Hottenrott, H. ORCID: https://orcid.org/0000-0002-1584-8106 and Mukherjee, A. ORCID: https://orcid.org/0000-0001-7566-6526 (2022) Division of labor in R&D? Firm size and specialization in corporate research. Journal of Economic Behavior & Organization, 194. pp. 1-23. ISSN 0167-2681 doi: 10.1016/j.jebo.2021.12.006

Abstract/Summary

Corporate research and development constitutes one of the main sources of innovation. Recent research, however, discusses a decline in corporate research and its implications for technological progress. The contribution of this study is to model research & development (R&D) decisions in an R&D investment model that allows the analysis of firms’ engagement in research (R) as compared to development (D) activities. The model predicts higher investments in both activities for larger firms, but it also shows that research intensity, i.e. the R-share in R&D, declines with firm size. We test these propositions using data of R&D-active firms over the period from 2000 to 2015. While larger firms invest indeed more in both research and development, results from panel model estimations that account for unobserved heterogeneity across firms show that the relative focus on research decreases with firm size. In addition, the empirical results suggest that, since the returns to research in terms of productivity gains decline with firm size, specialization maximizes overall returns to R and D.

Item Type	Article
URI	https://reading-clone.eprints-hosting.org/id/eprint/111449
Identification Number/DOI	10.1016/j.jebo.2021.12.006
Refereed	Yes
Divisions	No Reading authors. Back catalogue items Arts, Humanities and Social Science > School of Politics, Economics and International Relations > Economics
Publisher	Elsevier
Download/View statistics	View download statistics for this item