Advanced Search
MyIDEAS: Login to save this article or follow this journal

Firm growth and R&D expenditure

Contents:

Author Info

  • Alex Coad
  • Rekha Rao

Abstract

We apply a panel vector autoregression model to a firm-level longitudinal database to observe the co-evolution of sales growth, employment growth, profits growth and the growth of research and development (R&D) expenditure. Contrary to expectations, profit growth seems to have little detectable association with subsequent R&D investment. Instead, firms appear to increase their total R&D expenditure following growth in sales and employment. In a sense, firms behave 'as if' they aim for a roughly constant ratio of R&D to employment (or sales). We observe heterogeneous effects for growing or shrinking firms, however, suggesting that firms are less willing to reduce their R&D levels following a negative growth shock than they are willing to increase R&D after a positive shock.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.tandfonline.com/doi/abs/10.1080/10438590802472531
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.

Volume (Year): 19 (2010)
Issue (Month): 2 ()
Pages: 127-145

as in new window
Handle: RePEc:taf:ecinnt:v:19:y:2010:i:2:p:127-145

Contact details of provider:
Web page: http://www.tandfonline.com/GEIN20

Order Information:
Web: http://www.tandfonline.com/pricing/journal/GEIN20

Related research

Keywords: firm growth; panel VAR; R&D expenditure; industrial dynamics;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Michael Binder & Cheng Hsiao & M. Hashem Pesaran, 2000. "Estimation and Inference In Short Panel Vector Autoregressions with Unit Roots And Cointegration," CESifo Working Paper Series 374, CESifo Group Munich.
  2. Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
  3. Alex Coad, 2005. "Testing the Principle of "Growth of the Fitter": The Relationship between Profits and Firm Growth," Emory Economics 0531, Department of Economics, Emory University (Atlanta).
  4. David, Paul A. & Hall, Bronwyn H. & Toole, Andrew A., 1999. "Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence," Department of Economics, Working Paper Series qt1sz6g8bv, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  5. Hall, Bronwyn & Van Reenen, John, 2000. "How effective are fiscal incentives for R&D? A review of the evidence," Research Policy, Elsevier, vol. 29(4-5), pages 449-469, April.
  6. Giulio Bottazzi & Alex Coad & Nadia Jacoby & Angelo Secchi, 2005. "Corporate Growth and Industrial Dynamics: Evidence from French Manufacturing," LEM Papers Series 2005/21, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  7. Bruno Van Pottelsberghe & Dominique Guellec, 2003. "The impact of public R&D expenditure on business R&D," ULB Institutional Repository 2013/6213, ULB -- Universite Libre de Bruxelles.
  8. Alex Coad & Rekha Rao, 2006. "Innovation and Firm Growth in High-Tech Sectors: A Quantile Regression Approach," LEM Papers Series 2006/18, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  9. repec:hal:cesptp:halshs-00144415 is not listed on IDEAS
  10. Henry Grabowski & John Vernon, 2000. "The determinants of pharmaceutical research and development expenditures," Journal of Evolutionary Economics, Springer, vol. 10(1), pages 201-215.
  11. Alex Coad, 2006. "A Closer Look at Serial Growth Rate Correlation," LEM Papers Series 2006/29, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  12. U. Witt & C. Zellner, 2005. "Knowledge-based Entrepreneurship: The Organizational Side of Technology Commercialization," Papers on Economics and Evolution 2005-04, Philipps University Marburg, Department of Geography.
  13. Giulio Bottazzi & Angelo Secchi, 2003. "Common Properties and Sectoral Specificities in the Dynamics of U.S. Manufacturing Companies," Review of Industrial Organization, Springer, vol. 23(3), pages 217-232, December.
  14. Geroski, Paul A, 1999. "The Growth of Firms in Theory and in Practice," CEPR Discussion Papers 2092, C.E.P.R. Discussion Papers.
  15. Joao Pedro Azevedo, 2004. "GRQREG: Stata module to graph the coefficients of a quantile regression," Statistical Software Components S437001, Boston College Department of Economics, revised 17 Mar 2011.
  16. Delmar, Frederic & Davidsson, Per & Gartner, William B., 2003. "Arriving at the high-growth firm," Journal of Business Venturing, Elsevier, vol. 18(2), pages 189-216, March.
  17. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
  18. George Symeonidis, 1996. "Innovation, Firm Size and Market Structure: Schumpeterian Hypotheses and Some New Themes," OECD Economics Department Working Papers 161, OECD Publishing.
  19. James H. Stock & Mark W. Watson, 2001. "Vector Autoregressions," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 101-115, Fall.
  20. Alex Coad, 2007. "Neoclassical vs evolutionary theories of financial constraints : critique and prospectus," Documents de travail du Centre d'Economie de la Sorbonne r07008, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  21. Holger Gorg & Eric Strobl, 2007. "The Effect of R&D Subsidies on Private R&D," Economica, London School of Economics and Political Science, vol. 74(294), pages 215-234, 05.
  22. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521608275, April.
  23. Spiros Bougheas & Holger Görg & Eric Strobl, 2003. "Is R & D Financially Constrained? Theory and Evidence from Irish Manufacturing," Review of Industrial Organization, Springer, vol. 22(2), pages 159-174, March.
  24. Kaplan, Steven N & Zingales, Luigi, 1997. "Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 169-215, February.
  25. Alex Coad, 2007. "Exploring the "mechanics" of firm growth : evidence from a short-panel VAR," Documents de travail du Centre d'Economie de la Sorbonne r07037, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  26. Alessio Moneta, 2005. "Causality in macroeconometrics: some considerations about reductionism and realism," Journal of Economic Methodology, Taylor & Francis Journals, vol. 12(3), pages 433-453.
  27. repec:ebl:ecbull:v:15:y:2006:i:13:p:1-10 is not listed on IDEAS
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Bettina Becker, 2013. "The Determinants of R&D Investment: A Survey of the Empirical Research," Discussion Paper Series 2013_09, Department of Economics, Loughborough University, revised Sep 2013.
  2. Werner Hölzl, 2008. "Is the R&D Behaviour of Fast Growing SMEs Different? Evidence from CIS III Data for 16 Countries," WIFO Working Papers 327, WIFO.
  3. Alex Coad & Agustí Segarra & Mercedes Teruel, 2010. "Like milk or wine: Does firm performance improve with age?," Working Papers XREAP2010-10, Xarxa de Referència en Economia Aplicada (XREAP), revised Sep 2010.
  4. Coad, Alex & Segarra Blasco, Agustí, 1958- & Teruel, Mercedes, 2013. "Innovation and firm growth: Does firm age play a role?," Working Papers 2072/211886, Universitat Rovira i Virgili, Department of Economics.
  5. Segarra Blasco, Agustí, 1958- & Teruel, Mercedes, 2014. "High-growth firms and innovation: an empirical analysis for Spanish firms," Working Papers 2072/228402, Universitat Rovira i Virgili, Department of Economics.
  6. Crespo Cuaresma, Jesus & Oberhofer, Harald & Vincelette, Gallina A., 2014. "Institutional Barriers and Job Creation in Central and Eastern Europe," Working Papers in Economics and Finance 2014-1, University of Salzburg.
  7. Segarra Blasco, Agustí & Teruel Carrizosa, Mercedes, 2011. "High Growth Firms and Innovation: an empirical analysis for Spanish firms," Working Papers 2072/179669, Universitat Rovira i Virgili, Department of Economics.
  8. Alessandra Colombelli & Francesco Quatraro, 2013. "The persistence of firms' knowledge base: A quantile approach to Italian data," Working Papers hal-00867132, HAL.
  9. Francesco Quatraro, 2013. "Co-evolutionary patterns in regional knowledge bases and economic structure: evidence from European Regions," Working Papers hal-00992080, HAL.
  10. Bornhäll, Anders & Daunfeldt, Sven-Olov & Rudholm, Niklas, 2014. "Employment Protection Legislation and Firm Growth: Evidence from a Natural Experiment," HUI Working Papers 102, HUI Research.
  11. Matthias Bürger, 2011. "Dynamics of Collaborative Invention Tracking Growth of Cooperative and Total Patents in the Region," Jena Economic Research Papers 2011-045, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  12. Krzysztof Szczygielski & Wojciech Grabowski & Richard Woodward, 2013. "Innovation and the Growth of Service Firms:The Polish Case," CASE Network Studies and Analyses 0453, CASE-Center for Social and Economic Research.
  13. ELKEMALI, Taoufik & BEN REJEB, Aymen & MATOUSSI, Hamadi, 2013. "R&D Intensity and Financing Decisions: Evidence from European Firms," MPRA Paper 52059, University Library of Munich, Germany, revised 15 Oct 2013.
  14. Alexander Coad, 2007. "Disentangling the firm growth process: evidence from a recursive panel VAR," Papers on Economics and Evolution 2007-15, Philipps University Marburg, Department of Geography.
  15. Werner Hölzl & Klaus Friesenbichler, 2010. "High-growth firms, innovation and the distance to the frontier," Economics Bulletin, AccessEcon, vol. 30(2), pages 1016-1024.
  16. Jorge Alberto Rivera Godoy, 2012. "La incidencia de la innovación sobre la creación de valor: propuesta de un modelo desde la perspectiva financiera," REVISTA FACULTAD DE CIENCIAS ECONÓMICAS, UNIVERSIDAD MILITAR NUEVA GRANADA.
  17. 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.
  18. Florian Szücs, 2013. "M&A and R&D: Asymmetric Effects on Acquirers and Targets?," Discussion Papers of DIW Berlin 1331, DIW Berlin, German Institute for Economic Research.
  19. Tommaso Ciarli, 2012. "Structural Interactions and Long Run Growth. An Application of Experimental Design to Agent Based Models," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(5), pages 295-345.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:taf:ecinnt:v:19:y:2010:i:2:p:127-145. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.