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The Path of R&D Efficiency over Time

Listed author(s):
  • Pilar Beneito

    (University of Valencia and ERI-CES)

  • María Engracia Rochina-Barrachina

    (University of Valencia)

  • Amparo Sanchis

    (University of Valencia)

In this paper we investigate the pattern of R&D efficiency in terms of the number of product innovations achieved by firms over time. Embodied in the R&D capital stock, we distinguish among physical R&D capital and human R&D capital, and allow the latter to be subject to dynamic returns along firms’ R&D histories. We assume that firms’ innovation outcomes depend on the length of the period of time they have been investing in R&D and explore whether the interruption in this temporal sequence of engagement in R&D affects the rate of achievement of innovation outcomes. For this purpose, we estimate an innovation production function using a panel dataset of Spanish manufacturing firms for the period 1990-2006. Our results suggest that R&D activities exhibit dynamic returns that are increasing but at a decreasing rate, possibly due to exhaustion of innovation opportunities. In addition, our findings indicate that interruptions of R&D activities reduce R&D efficiency, probably due to organizational forgetting. However, spillover effects seem to exist between firms’ R&D spells since firms resuming R&D activities achieve innovation success rates above the innovation rates of their initial years of R&D activities.

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File URL: ftp://147.156.210.157/RePEc/pdf/eec_1403.pdf
File Function: First version, 2014
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Paper provided by Department of Applied Economics II, Universidad de Valencia in its series Working Papers with number 1403.

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Length: 42 pages
Date of creation: Apr 2014
Handle: RePEc:eec:wpaper:1403
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