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The role of R&D in new firm growth

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  • Erik Stam

    (Tjalling Koopmans Institute, Utrecht School of Economics, Utrecht University, Utrecht, The Netherlands; Centre for Technology Management, University of Cambridge, Cambridge, United Kingdom; Scientific Council for Government Policy (WRR), The Hague, The Netherlands; Max Planck Institute of Economics - Entrepreneurship, Growth and Public Policy group, Jena, Germany)

  • Karl Wennberg

    (Centre for Entrepreneurship and Business Creation, Stockholm School of Economics, Stockholm, Sweden.)

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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Bibliographic Info

Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2009-004.

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Date of creation: 12 Jan 2009
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Handle: RePEc:jrp:jrpwrp:2009-004

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Keywords: New Firms; Innovation; R&D; firm growth; alliances; product development;

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References

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Citations

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Cited by:
  1. José Albors-Garrigos & José L. Hervas-Oliver, 2011. "Making sense of innovation by R&D and non-R&D innovators in low technology contexts: a forgotten lesson for policymakers," Working Papers. Serie EC 2011-06, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  2. Dan Johansson & Sven-Olov Daunfeldt, 2011. "What explains the presence of High-growth firms in industries?," ERSA conference papers ersa10p1500, European Regional Science Association.
  3. Hermans J. & Vanderstraeten J. & Dejardin M. & Ramdani D. & Stam E. & Van Witteloostuijn A., 2012. "Ambitious entrepreneurship: Antecedents and consequences," Working Papers 2012023, University of Antwerp, Faculty of Applied Economics.
  4. Alex Coad & Werner Hölzl, 2010. "Firm Growth: Empirical Analysis," WIFO Working Papers 361, WIFO.
  5. Wennberg, Karl & Wiklund, Johan & Wright, Mike, 2011. "The effectiveness of university knowledge spillovers: Performance differences between university spinoffs and corporate spinoffs," Research Policy, Elsevier, vol. 40(8), pages 1128-1143, October.
  6. José L. González-Pernía & Ferran Vendrell-Herrero, 2011. "Does the intensity in R&D generate start-up’s growth?," ERSA conference papers ersa10p483, European Regional Science Association.
  7. Wim Naudé, 2011. "Foreign Aid for Innovation: The Missing Ingredient in Private Sector Development?," Working Papers 2011/35, Maastricht School of Management.
  8. Erik Stam, 2010. "Growth beyond Gibrat: firm growth processes and strategies," Small Business Economics, Springer, vol. 35(2), pages 129-135, September.
  9. Andres Jung & Cecilia Plottier, 2011. "Firm growth in a regional trade integration context," ERSA conference papers ersa11p1502, European Regional Science Association.
  10. Sven-Olov Daunfeldt & Niklas Elert & Dan Johansson, 2011. "Industrial Variation of High-Growth Firms," ERSA conference papers ersa10p1658, European Regional Science Association.
  11. F. Stam & Neil Thompson & Andrea Herrmann & Marko Hekkert, 2012. "The Environmental Regulation Paradox for Clean Tech Ventures," Scales Research Reports H201217, EIM Business and Policy Research.
  12. Simon Parker & David Storey & Arjen Witteloostuijn, 2010. "What happens to gazelles? The importance of dynamic management strategy," Small Business Economics, Springer, vol. 35(2), pages 203-226, September.
  13. José Luis González Pernia & M. Davide Parrilli & Iñaki Peña, . "Learning Modes, Types of Innovation and Economic Performance," Working Papers 2012R01, Basque Institute of Competitiveness.
  14. Pietro Moncada-Paterno-Castello, 2011. "Companies' growth in the EU: What is research and innovation policy's role?," JRC-IPTS Working Papers on Corporate R&D and Innovation 2011-03, Institute of Prospective Technological Studies.
  15. André van Stel & Lorraine Uhlaner & Haibo Zhou & Valerie Duplat, 2012. "Disentangling the effects of organizational capabilities, innovation and firm size on SME sales growth," Scales Research Reports H201211, EIM Business and Policy Research.
  16. Alex Coad & Rekha Rao, 2010. "R&D and firm growth rate variance," Economics Bulletin, AccessEcon, vol. 30(1), pages 702-708.

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