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Small Business EconomicsVolume 45, Issue 1, 1 June 2015, Pages 39-62

The medium-term effect of R&D on firm growth(Article)(Open Access)

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  • aDepartment of Economics (Section AE2), School of Business and Economics, Maastricht University, P.O. Box 616, Maastricht, 6200 MD, Netherlands
  • bGREDEG-CNRS, University of Nice-Sophia Antipolis, Nice, France
  • cLEM, Scuola Superiore Sant’Anna, Pisa, Italy
  • dUNU-MERIT, Maastricht, Netherlands
  • eCentre for Technology, Innovation and Culture (TIK), University of Oslo, Oslo, Norway

Abstract

This study analyses the effect of R&D expenditure on firm employment growth in the medium term, using six cross-sectional waves of an innovation survey conducted in the Netherlands in all sectors. The analysis is focused on firms having positive R&D expenditure and investigates whether higher investments in R&D (in proportion to firm turnover) translate into higher medium-term growth rates. Comparisons with growth on a shorter term are conducted by following the firm size evolution since the R&D investment for five consecutive years and allowing for firm exit. At all time terms, quantile regression techniques indicate that a higher R&D has a positive effect on high growers and allows a higher number of firms to be high growers. Still, once a firm invests in R&D, even if a higher investment makes the firm more likely to have a very good performance, it does not make it less likely to have a bad one. © 2015, The Author(s).

Author keywords

Firm growthIndustrial dynamicsQuantile regressionR&D expenditure

Funding details

Funding sponsor Funding number Acronym
Sixth Framework ProgrammeFP6

  • 1

    The authors want to thank Rudi Bekkers, Alex Coad, Koen Frenken, Onder Nomaler, the participants at the DIME Final Conference held in Maastricht on April 6–8, 2011, and the participants at the ECIS economics seminar held in Eindhoven on October 13, 2011. This study has partially been developed within the project on “Dynamics of Innovation and Markets in Europe” (Work Package 2.10 on innovation, firm entry and exit, and the growth of industries), sponsored by the 6th Framework Programme of the European Union.

  • ISSN: 0921898X
  • Source Type: Journal
  • Original language: English
  • DOI: 10.1007/s11187-015-9640-6
  • Document Type: Article
  • Publisher: Kluwer Academic Publishers

  Capasso, M.; Department of Economics (Section AE2), School of Business and Economics, Maastricht University, P.O. Box 616, Maastricht, Netherlands
© Copyright 2016 Elsevier B.V., All rights reserved.

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