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Does R&D Protect Smes From The Hardness Of The Cycle? Evidence From Spanish Smes (1990-2009)

Listed author(s):
  • Dolores Añón Higón

    (Department of Applied Economics II and ERICES, Universitat de València)

  • Miguel Manjón

    (QURE-CREIP Department of Economics, Universitat Rovira i Virgili)

  • Juan A. Máñez

    (Department of Applied Economics II and ERICES, Universitat de València)

  • Juan A. Sanchis-Llopis

    (Department of Applied Economics II and ERICES, Universitat de València)

This paper analyses whether undertaking R&D activities allows SMEs to attenuate the negative impact of recessions on productivity. In contrast to other studies we use a firm level indicator of the cycle based on firms’ own perceptions, while total factor productivity is obtained using a control function methodology in which we recognise the potential role that R&D experience might have in shaping future firms’ productivity. The analysis is performed using a representative sample of Spanish SMEs for the period 1990-2009. Results show both that R&D activities render positive productivity returns, and that performing R&D helps to alleviate the negative effects of downturns on productivity. Additionally, R&D seems to have a countercyclical effect upon SME’s productivity over the business cycle, as we find that SMEs R&D productivity premium in recessions doubles that of expansions.

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File URL: ftp://147.156.210.157/RePEc/pdf/eec_1411.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 1411.

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Date of creation: Dec 2014
Handle: RePEc:eec:wpaper:1411
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  9. Aghion, Philippe & Askenazy, Philippe & Berman, Nicolas & Cette, Gilbert & Eymard, Laurent, 2012. "Credit Constraints and the Cyclicality of R&D Investment: Evidence from France," Scholarly Articles 27759621, Harvard University Department of Economics.
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  20. Álvaro Escribano & Rodolfo Stucchi, 2011. "Catching up in total factor productivity through the business cycle: Evidence from Spanish manufacturing firms," Working Papers 2011-10, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
  21. Dolores Añón Higón & Miguel Manjón Antolín & Juan A. Mañez, 2011. "Multinationals, R&D, and productivity: evidence for UK manufacturing firms," Industrial and Corporate Change, Oxford University Press, vol. 20(2), pages 641-659, April.
  22. Jan-Benedict E. M. Steenkamp & Eric (Er) Fang, 2011. "The Impact of Economic Contractions on the Effectiveness of R&D and Advertising: Evidence from U.S. Companies Spanning Three Decades," Marketing Science, INFORMS, vol. 30(4), pages 628-645, July.
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