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DIMINISHING RETURNS TO R&D INVESTMENT ON INNOVATION IN MANUFACTURING SMEs: DO THE TECHNOLOGICAL INTENSITY OF INDUSTRY MATTER?

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  • KONSHIK KIM

    (Intellectual Property Department, School of Graduate Studies, Hongik University, Seoul, Republic of Korea)

Abstract

This paper examined the nonlinear R&D-innovation relationships of SMEs (small and medium-sized enterprises) and the differences in the strength and productivity of R&D investment between low-, medium-, and high-tech industry sectors. Using 2740 firm data in South Korea, this study found that R&D investment has an inverted U-shaped relationship with registered patents such that patents increase at a decreasing rate as R&D investment increases. The relationship between R&D investment and innovative sales resulting from R&D investment in manufacturing SMEs also exhibits an inverted U-shaped form. The R&D-innovation relationship of SMEs in high-tech sectors is more strengthened such that the optimal level of R&D investment in high-tech sectors is higher than those for SMEs in low-tech sectors. This study also demonstrated that the R&D-innovation relationship for high-tech sectors is more flattened so that the diminishing returns to R&D investment is weakened with the increase of technological intensity of industry sectors.

Suggested Citation

  • Konshik Kim, 2018. "DIMINISHING RETURNS TO R&D INVESTMENT ON INNOVATION IN MANUFACTURING SMEs: DO THE TECHNOLOGICAL INTENSITY OF INDUSTRY MATTER?," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 22(07), pages 1-27, October.
    • Handle: RePEc:wsi:ijimxx:v:22:y:2018:i:07:n:s1363919618500561
    DOI: 10.1142/S1363919618500561
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