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Variations in the effect of R&D investment on firm productivity: UK evidence

Author

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  • Solomon, Edna M.
  • Ugur, Mehmet
  • Guidi, Francesco
  • Trushin, Esref

Abstract

Our research provides novel findings about the heterogenous effects of R&D on UK firm-level productivity. In our comprehensive analysis, the effect of R&D on UK productivity is broken down by type of R&D, sources of R&D funding, sector and Pavitt class. Our sample consists of a panel of 10,920 firms from 1998 to 2012. We find that R&D has a positive and significant effect on labour productivity in the UK. However, there is considerable heterogeneity in the results. The output elasticity of R&D capital is higher for firms in less competitive sectors and in more R&D intensive sectors. Finally, we find that applied R&D, experimental R&D, intramural R&D and R&D from private sources tend to have higher productivity impacts compared with basic R&D, extramural R&D or publicly-funded R&D.

Suggested Citation

  • Solomon, Edna M. & Ugur, Mehmet & Guidi, Francesco & Trushin, Esref, 2015. "Variations in the effect of R&D investment on firm productivity: UK evidence," Greenwich Papers in Political Economy 14081, University of Greenwich, Greenwich Political Economy Research Centre.
    • Handle: RePEc:gpe:wpaper:14081
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    File URL: http://gala.gre.ac.uk/id/eprint/14081/1/GPERC30_Solomon_et_alF.pdf
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    Cited by:

    1. Ugur, Mehmet, 2018. "Innovation, job creation and productivity: implications for public policy," Greenwich Papers in Political Economy 19096, University of Greenwich, Greenwich Political Economy Research Centre.

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