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Related diversification and R&D intensity dynamics

Listed author(s):
  • Alonso-Borrego, César
  • Forcadell, Francisco Javier

Using longitudinal data of Spanish manufacturing companies, we study the dynamic, bidirectional relationship between firm research and development (R&D) intensity and corporate diversification in an organic growth setting. Our empirical approach accounts for the different sources of endogeneity. Although we find a positive linear effect of R&D intensity on related diversification, the effect of related diversification on R&D intensity assumes the form of an inverted U. Thus, the effect of related diversification on R&D intensity is positive, but marginally decreases for moderate levels of related diversification. Such an effect can become negative, however, for high levels of related diversification. Additionally, as a consequence of dynamics, the effects after one year are substantially lower than the overall effects that occur over several years.

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Article provided by Elsevier in its journal Research Policy.

Volume (Year): 39 (2010)
Issue (Month): 4 (May)
Pages: 537-548

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Handle: RePEc:eee:respol:v:39:y:2010:i:4:p:537-548
Contact details of provider: Web page: http://www.elsevier.com/locate/respol

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