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The Role of Time in Assessing the Economic Effects of R&D


  • Mario Kafouros
  • Chengqi Wang


This study investigates the impacts of R&D on firm performance. It extends previous research by constructing alternative stocks of R&D-Capital that take into account that time plays an important role in assessing the pay-off of industrial research. The results show that even when we employed R&D-Capitals that placed more emphasis on the industrial research that had been undertaken 7 years ago, the effects of R&D were very (statistically) significant and relatively high, thereby suggesting that the life of R&D (on average) tends to be long. The results however, vary across organizations depending on both firm size and the technological opportunities that a company faces. It appears that the depreciation rate of R&D investments is higher in the case of technologically sophisticated firms. In contrast, strategic investments in industrial research generate a relatively constant effect on the performance of other firms, supporting the notion that the corresponding returns for such firms decay slowly.

Suggested Citation

  • Mario Kafouros & Chengqi Wang, 2008. "The Role of Time in Assessing the Economic Effects of R&D," Industry and Innovation, Taylor & Francis Journals, vol. 15(3), pages 233-251.
  • Handle: RePEc:taf:indinn:v:15:y:2008:i:3:p:233-251 DOI: 10.1080/13662710802041638

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    References listed on IDEAS

    1. Bingley, Paul & Westergaard-Nielsen, Niels, 2004. "Personnel policy and profit," Journal of Business Research, Elsevier, vol. 57(5), pages 557-563, May.
    2. Klepper, Steven, 2001. "Employee Startups in High-Tech Industries," Industrial and Corporate Change, Oxford University Press, vol. 10(3), pages 639-674, September.
    3. Constance E. Helfat & Marvin B. Lieberman, 2002. "The birth of capabilities: market entry and the importance of pre-history," Industrial and Corporate Change, Oxford University Press, vol. 11(4), pages 725-760, August.
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    Cited by:

    1. Thomas Brenner & Matthias Duschl, 2015. "Causal dynamic effects in regional systems of technological activities: a SVAR approach," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 55(1), pages 103-130, October.
    2. Brenner, Thomas, 2015. "Science, Innovation and National Growth," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112873, Verein für Socialpolitik / German Economic Association.
    3. Alex Coad & Nanditha Mathew & Emanuele Pugliese, 2017. "What's good for the goose ain't good for the gander: cock-eyed counterfactuals and the performance effects of R&D," LEM Papers Series 2017/21, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    4. Thomas Brenner, 2014. "Science, Innovation and National Growth," Working Papers on Innovation and Space 2014-03, Philipps University Marburg, Department of Geography.


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