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R&D Expenditures and Geographical Sales Diversification

Author

Listed:
  • Christopher F Baum

    () (Boston College
    DIW Berlin)

  • Mustafa Caglayan

    () (Heriot-Watt University)

  • Oleksandr Talavera

    () (University of Sheffield)

Abstract

This paper empirically examines the role of diversification in export markets on firm-level R&D activities. We show that geographical sales diversification across different regions of the world induces UK firms to increase their R&D expenditures, as firms must innovate and develop new products to maintain a competitive edge over their rivals. This finding is robust to a battery of sensitivity checks. Furthermore, we find no evidence of reverse causality between R&D and sales diversification.

Suggested Citation

  • Christopher F Baum & Mustafa Caglayan & Oleksandr Talavera, 2012. "R&D Expenditures and Geographical Sales Diversification," Boston College Working Papers in Economics 794, Boston College Department of Economics, revised 12 Nov 2012.
  • Handle: RePEc:boc:bocoec:794
    Note: Previously circulated as "R&D Expenditures and Export Sales Diversification"
    as

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    References listed on IDEAS

    as
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    Cited by:

    1. Alex Coad, 2017. "Persistent heterogeneity of R&D intensities within sectors: Evidence and policy implications," JRC Working Papers on Corporate R&D and Innovation 2017-04, Joint Research Centre (Seville site).
    2. Alex Coad, 2017. "Persistent heterogeneity of R&D intensities within sectors: Evidence and policy implications," JRC Working Papers on Corporate R&D and Innovation 2017-04, Joint Research Centre (Seville site).
    3. Bettina Becker, 2013. "The Determinants of R&D Investment: A Survey of the Empirical Research," Discussion Paper Series 2013_09, Department of Economics, Loughborough University, revised Sep 2013.
    4. Gao, Wenlian & Chou, Julia, 2015. "Innovation efficiency, global diversification, and firm value," Journal of Corporate Finance, Elsevier, vol. 30(C), pages 278-298.

    More about this item

    Keywords

    R&D investment; Export diversification; Foreign direct investment; Cash holdings;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models

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