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The roles of R&D in new firm growth

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  • Erik Stam

    ()

  • Karl Wennberg

    ()

Abstract

Innovative start-ups are an important driver of economic growth. This article presents empirical evidence on the effects of R&D on new product development, inter-firm alliances and employment growth during the early life course of firms. We use a dataset that contains a sample of new firms that is representative for the whole population of start-ups. This dataset covers the first six years of the life course of firms. R&D reveals to play several roles during the early life course of high tech as well as high growth firms. The effect of initial R&D on high tech firm growth runs via increasing levels of inter-firm alliances in the first post-entry years. R&D efforts enable the exploitation of external knowledge. Initial R&D also stimulates new product development later on in the life course of high tech firms, but this does not seem to affect firm growth. R&D does not affect the growth rate of new low tech firms, which seems to be driven mainly by the growth ambitions of the founding entrepreneur. The results show that R&D matters for a limited but important set of new high tech and high growth firms, which are key in innovation and entrepreneurship policies.

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File URL: http://hdl.handle.net/10.1007/s11187-009-9183-9
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Bibliographic Info

Article provided by Springer in its journal Small Business Economics.

Volume (Year): 33 (2009)
Issue (Month): 1 (June)
Pages: 77-89

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Handle: RePEc:kap:sbusec:v:33:y:2009:i:1:p:77-89

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Web page: http://www.springerlink.com/link.asp?id=100338

Related research

Keywords: New firms; Innovation; R&D; Firm growth; Alliances; Product development; D21; L23; L25; L26; M13;

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