IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Technical Change, Efficiency, Firm Size and Age in an R&D Intensive Sector

  • Elina Berghäll

The relationship between firm size and age relative to technical change and efficiency is examined in a highly innovative and dynamic sector, the Finnish ICT equipment manufacturing industry. A stochastic frontier model is applied to an unbalanced firm level panel over the period 1990?2003. The sample is representative of almost half of corporate R&D in Finland. The Method of Moments and Battese-Coelli efficiency measures are obtained to compare permanent and time-varying efficiency levels. Results show firm age to be relatively insignificant. New firms do not dominate technical change. In contrast, firm size makes a substantial contribution to productivity growth, technical change and efficiency. High elasticity of factor inputs result in, on average, highly increasing returns to scale. These factors point towards growing concentration and capital-intensity, which can be expected to further widen the productivity gap between small and large firms. To survive, smaller firms may need to combine frontier technology adoption with expanding scale, e.g., by mergers, to improve both technical and scale efficiency.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

File URL:
Download Restriction: no

Paper provided by Government Institute for Economic Research Finland (VATT) in its series Discussion Papers with number 390.

in new window

Date of creation: 04 May 2006
Date of revision:
Handle: RePEc:fer:dpaper:390
Contact details of provider: Postal: Arkadiankatu 7, P.O. Box 1279, FI-00101 Helsinki
Phone: +358 295 519 400
Fax: +358 295 519 599
Web page:

More information through EDIRC

Order Information: Email:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
  2. Paul Stoneman & Otto Toivanen, 2001. "The Impact of Revised Recommended Accounting Practices on R&D Reporting by UK Firms," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 8(1), pages 123-136.
  3. Bronwyn H. Hall, 2002. "The Financing of Research and Development," Oxford Review of Economic Policy, Oxford University Press, vol. 18(1), pages 35-51, Spring.
  4. Maliranta, Mika, 2001. "Productivity Growth and Micro-level Restructuring. Finnish experiences during the turbulent decades," Discussion Papers 757, The Research Institute of the Finnish Economy.
  5. Patrizio Pagano & Fabiano Schivardi, 2001. "Firm Size Distribution and Growth," Temi di discussione (Economic working papers) 394, Bank of Italy, Economic Research and International Relations Area.
  6. Acs, Zoltan J & Audretsch, David B, 1988. "Innovation in Large and Small Firms: An Empirical Analysis," American Economic Review, American Economic Association, vol. 78(4), pages 678-90, September.
  7. Winter, Sidney G., 1984. "Schumpeterian competition in alternative technological regimes," Journal of Economic Behavior & Organization, Elsevier, vol. 5(3-4), pages 287-320.
  8. Eric J. Bartelsman & Mark Doms, 2000. "Understanding productivity: lessons from longitudinal microdata," Finance and Economics Discussion Series 2000-19, Board of Governors of the Federal Reserve System (U.S.).
  9. Autio, Erkko & Yli-Renko, Helena, 1998. "New, technology-based firms in small open economies--An analysis based on the Finnish experience," Research Policy, Elsevier, vol. 26(9), pages 973-987, April.
  10. Francesco Daveri & Olmo Silva, 2004. "Not only Nokia: what Finland tells us about new economy growth," Economic Policy, CEPR;CES;MSH, vol. 19(38), pages 117-163, 04.
  11. Cohen, Wesley M & Klepper, Steven, 1996. "Firm Size and the Nature of Innovation within Industries: The Case of Process and Product R&D," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 232-43, May.
  12. Link, Albert N, 1980. "Firm Size and Efficient Entrepreneurial Activity: A Reformulation of the Schumpeter Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 88(4), pages 771-82, August.
  13. Rajshree Agarwal & Michael Gort, 2002. "Firm and Product Life Cycles and Firm Survival," American Economic Review, American Economic Association, vol. 92(2), pages 184-190, May.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:fer:dpaper:390. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anita Niskanen)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.