What Governs Firm-Level R&D: Internal or External Factors?
AbstractTwo parallel streams of research investigating the determinants of corporate R&D exist: one from economics and the other from management. The economists' variables tend to reflect the firm's external environment while the explanatory variables used by management scientists are commonly internal to the firm. This paper combines both approaches to test for the relative importance of each type of factor using firm-level data on large Australian companies from 1990 to 2005. Our evidence suggests that most of a firm's R&D activity can be explained by time-invariant factors which we believe relate to internal and specific characteristics such as the firm's managerial style, competitive strategy and how it communicates with employees. Of the remaining time-varying portion, we find that past profits, the rate of growth of the industry and the level of R&D activity over the firm's industry is pertinent. These results are suggestive since we cannot clearly identify the extent to which the firm's internal behaviour is conditioned by its external environment.
Download InfoIf 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.
Bibliographic InfoPaper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2009n13.
Length: 28 pages
Date of creation: May 2009
Date of revision:
Contact details of provider:
Postal: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia
Phone: +61 3 8344 2100
Fax: +61 3 8344 2111
Web page: http://www.melbourneinstitute.com/
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-11 (All new papers)
- NEP-CSE-2009-07-11 (Economics of Strategic Management)
- NEP-INO-2009-07-11 (Innovation)
- NEP-SBM-2009-07-11 (Small Business Management)
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.:
- Jaffe, Adam B & Trajtenberg, Manuel & Henderson, Rebecca, 1993.
"Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations,"
The Quarterly Journal of Economics,
MIT Press, vol. 108(3), pages 577-98, August.
- Jaffe, A.B. & Trajtenberg, M., 1992. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," Papers 14-92, Tel Aviv.
- Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1992. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," NBER Working Papers 3993, National Bureau of Economic Research, Inc.
- Hall, Bronwyn, 2002.
"The Financing of Research and Development,"
Department of Economics, Working Paper Series
qt5rf0x9gz, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Hall, Bronwyn H., 2002. "The Financing of Research and Development," Department of Economics, Working Paper Series qt34c1c643, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Bronwyn H. Hall, 2002. "The Financing of Research and Development," NBER Working Papers 8773, National Bureau of Economic Research, Inc.
- Bronwyn H. Hall, 2003. "The Financing of Research and Development," Finance 0303003, EconWPA.
- Douglas Cumming & Jeffrey MacIntosh, 2000. "The Determinants of R & D Expenditures: A Study of the Canadian Biotechnology Industry," Review of Industrial Organization, Springer, vol. 17(4), pages 357-370, December.
- Rothwell, R. & Freeman, C. & Horlsey, A. & Jervis, V. T. P. & Robertson, A. B. & Townsend, J., 1974. "SAPPHO updated - project SAPPHO phase II," Research Policy, Elsevier, vol. 3(3), pages 258-291, November.
- Acs, Zoltan J & Audretsch, David B, 1987. "Innovation, Market Structure, and Firm Size," The Review of Economics and Statistics, MIT Press, vol. 69(4), pages 567-74, November.
- Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
- Matthew Rafferty & Mark Funk, 2008. "Asymmetric Effects Of The Business Cycle On Firm-Financed R&D," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 17(5), pages 497-510.
- John Scott, 1984. "Firm versus Industry Variability in R&D Intensity," NBER Chapters, in: R & D, Patents, and Productivity, pages 233-248 National Bureau of Economic Research, Inc.
- Dietmar Harhoff & Francis Narin & F. M. Scherer & Katrin Vopel, 1999. "Citation Frequency And The Value Of Patented Inventions," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 511-515, August.
- Spyros Arvanitis, 2008. "Explaining Innovative Activity In Service Industries: Micro Data Evidence For Switzerland," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 17(3), pages 209-225.
- Heinz Hollenstein, 2002. "Determinants of the Adoption of Information and Communication Technologies (ICT)," WIFO Working Papers 183, WIFO.
- Paul Stoneman & Otto Toivanen, 2001. "The Impact of Revised Recommended Accounting Practices on R&D Reporting by UK Firms," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 8(1), pages 123-136.
- Emmanuel Duguet & Stéphanie Monjon, 2004. "Is innovation persistent at the firm Level . An econometric examination comparing the propensity score and regression methods," Cahiers de la Maison des Sciences Economiques v04075, Université Panthéon-Sorbonne (Paris 1).
- Covin, Jeffrey G. & Slevin, Dennis P. & Heeley, Michael B., 2001. "Strategic decision making in an intuitive vs. technocratic mode: structural and environmental considerations," Journal of Business Research, Elsevier, vol. 52(1), pages 51-67, April.
- Henry G. Grabowski, 1968. "The Determinants of Industrial Research and Development: A Study of the Chemical, Drug, and Petroleum Industries," Journal of Political Economy, University of Chicago Press, vol. 76, pages 292.
- Ariel Pakes & Mark Schankerman, 1980. "An Exploration into the Determinants of Research Intensity," NBER Working Papers 0438, National Bureau of Economic Research, Inc.
- Bosworth, Derek & Rogers, Mark, 2001. "Market Value, R&D and Intellectual Property: An Empirical Analysis of Large Australian Firms," The Economic Record, The Economic Society of Australia, vol. 77(239), pages 323-37, December.
- Branch, Ben, 1974. "Research and Development Activity and Profitability: A Distributed Lag Analysis," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 999-1011, Sept./Oct.
- Andr�s Barge-Gil, 2013.
"Open Strategies and Innovation Performance,"
Industry and Innovation,
Taylor & Francis Journals, vol. 20(7), pages 585-610, October.
- Tingvall, Patrik & Karpaty, Patrik, 2011.
"Offshoring and Home Country R&D,"
Ratio Working Papers
180, The Ratio Institute.
- Karpaty, Patrik & Tingvall, Patrik Gustavsson, 2011. "Offshoring and Home Country R&D," Working Paper Series in Economics and Institutions of Innovation 254, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jenny Chen).
If references are entirely missing, you can add them using this form.