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Exploring the Sources of Firm-level Scale Economies in R&D: Complementary assets, internal and external knowledge inflows, and inventor team size


  • NAGAOKA Sadao
  • OWAN Hideo


This paper explores the sources of firm-level scale economies in R&D, based on unique project-level data from a new large-scale survey of Japanese inventors, matched with firm-level data. We focus on four sources: complementary assets, internal and external knowledge inflows, and inventor team size. Major findings include: (1) a larger firm tends to generate more patents from a research project but not more valuable patents, controlling for the objectives and the R&D investment (inventive efforts) for the project; (2) the sales of a firm rather than its R&D (or patent stocks) significantly affects the number of patents from the project, suggesting that the main source of such scale economy is not internal knowledge inflow but "appropriation advantage" of a large firm; (3) an inventor in a large firm often gains important knowledge for the project from internal knowledge inflow as well as from scientific literature. However, the performance of R&D-for which internal knowledge is important-tends to be low; and (4) the size of inventor teams increases with firm size and technological diversity. A larger team size is significantly associated with higher patent value and, as such, the size of the inventor team is one source of firm-level scale economies.

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  • NAGAOKA Sadao & OWAN Hideo, 2011. "Exploring the Sources of Firm-level Scale Economies in R&D: Complementary assets, internal and external knowledge inflows, and inventor team size," Discussion papers 11038, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:11038

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    1. Esteban-Pretel, Julen & Nakajima, Ryo & Tanaka, Ryuichi, 2011. "Are contingent jobs dead ends or stepping stones to regular jobs? Evidence from a structural estimation," Labour Economics, Elsevier, vol. 18(4), pages 513-526, August.
    2. Esteban-Pretel, Julen & Nakajima, Ryo & Tanaka, Ryuichi, 2010. "TFP growth slowdown and the Japanese labor market in the 1990s," Journal of the Japanese and International Economies, Elsevier, vol. 24(1), pages 50-68, March.
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    Cited by:

    1. Dang, Jianwei & Motohashi, Kazuyuki, 2012. "Patent value and liquidity: evidence from patent-collateralized loans in China," MPRA Paper 49547, University Library of Munich, Germany.

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