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A theory of firm growth: Learning capability, knowledge threshold, and patterns of growth

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  • Lee, Chang-Yang

Abstract

This paper focuses on the dual role of R&D - knowledge generation and the technological-competence-enhancing effect of R&D - and its implication for the endogenous evolution of R&D productivity and the pattern of firm growth. In particular, based on the evolution of firm-specific R&D productivity or technological competence, this paper derives a simple R&D-based model of firm growth capable of explaining various aspects of firm growth. The model proposes three prototype patterns of firm growth, depending on both firm- and industry-specific characteristics. The former includes firm-specific technological-competence-enhancing capability and the initial level of technological knowledge, and the latter includes industry-specific R&D appropriability. Specifically, firms with low technological-competence-enhancing capability tend to follow a convergent growth pattern in which firm growth gradually declines, while firms with high technological-competence-enhancing capability tend to exhibit either a sustained or a vicious growth pattern depending on the initial size of their technological knowledge stock. An empirical analysis of unique data on firm growth and technological capability provides supportive evidence for the role of technological-competence-enhancing capability in conditioning the pattern of firm growth.

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Bibliographic Info

Article provided by Elsevier in its journal Research Policy.

Volume (Year): 39 (2010)
Issue (Month): 2 (March)
Pages: 278-289

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Handle: RePEc:eee:respol:v:39:y:2010:i:2:p:278-289

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Keywords: Firm growth Technological competence Learning-by-doing in R&D Knowledge threshold;

References

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Citations

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Cited by:
  1. Alessandra Colombelli & Jackie Krafft & Francesco Quatraro, 2012. "High Growth Firms and Technological Knowledge: Do gazelles follow exploration or exploitation strategies?," Working Papers hal-00666707, HAL.
  2. Nunes, Paulo Maçãs & Serrasqueiro, Zélia & Leitão, João, 2012. "Is there a linear relationship between R&D intensity and growth? Empirical evidence of non-high-tech vs. high-tech SMEs," Research Policy, Elsevier, vol. 41(1), pages 36-53.
  3. Hugo Pinto, 2011. "Knowledge Transfer in the Mirror: Reflections on the Determinants of Research Groups and Companies Collaborative Patterns within Andalusia's Regional Innovation System," ERSA conference papers ersa11p212, European Regional Science Association.
  4. Alessandra Colombelli & Naciba Haned & Christian Le Bas, 2011. "On Firm Growth and Innovation. Some new empirical perspectives using French CIS (1992-2004)," ICER Working Papers 07-2011, ICER - International Centre for Economic Research.
  5. Hyytinen, Ari & Maliranta, Mika, 2013. "Firm lifecycles and evolution of industry productivity," Research Policy, Elsevier, vol. 42(5), pages 1080-1098.

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