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The effects of R&D intensity and tax incentives on firms’ growth - empirical evidence from world's top R&D spending firms between 2003 and 2012

Author

Listed:
  • Tiago Soares

    (FEP-UP, School of Economics and Management, University of Porto)

  • Samuel Pereira

    (FEP-UP, School of Economics and Management, University of Porto)

  • Elísio Brandão

    (FEP-UP, School of Economics and Management, University of Porto)

Abstract

R&D expenditures made by companies, and governmental policies oriented for the promotion of these expenditures in the private sector, are nowadays considered variables that have an impact on firms’ growth in the medium term. This study aims at understanding the simultaneous influence of R&D investment and R&D tax incentives on firms’ growth, for different technological and knowledge-intensity industries. For that, a panel data of 1127 firms belonging to 35 different industries from 21 OECD countries, during the period between 2003 and 2012, was used. The results of the econometric estimation confirm, as foreseen in the literature, the positive effect for firms’ net sales growth of their investment in R&D and of tax policies that benefit the firms which perform these types of activities, particularly in high-tech firms. The results also returned a positive effect of R&D intensity in firms’ growth in the period before crisis (2003 - 2007) and a negative and significant crossover effect of R&D tax credits and R&D intensity in firms’ growth for the period before crisis. The two factors remain insignificant in crisis period, suggesting that other factors gained a more powerful explanation of a firm’s growth in that period.

Suggested Citation

  • Tiago Soares & Samuel Pereira & Elísio Brandão, 2014. "The effects of R&D intensity and tax incentives on firms’ growth - empirical evidence from world's top R&D spending firms between 2003 and 2012," FEP Working Papers 540, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:540
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    R&D investment; R&D tax credits; firm’s growth;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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