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The Return to R&D and Seller-buyer Interactions: A Quantile Regression Approach

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Abstract

In this paper we analyze whether a firm’s return to its R&D stock is affected by seller-buyer interactions. We suggest that firms that are in close contact with their customers will be relatively more sensitive to their customers’ needs, and therefore adjust their R&D activities accordingly. This, in turn, will boost sales and increase the return to R&D. To the extent that seller-buyer interactions are costly, large and productive firms will have an advantage in overcoming such costs. We test these hypotheses using a fixed effects quantile regression framework. Results suggest that large firms active in industries characterized by frequent seller-buyer interactions have a higher return to R&D than other firms.

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  • Westerberg, Hans Seerar, 2014. "The Return to R&D and Seller-buyer Interactions: A Quantile Regression Approach," Ratio Working Papers 231, The Ratio Institute.
  • Handle: RePEc:hhs:ratioi:0231
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    Keywords

    firm behavior; firm performance; production and organizations; firm size; diversification and scope;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D29 - Microeconomics - - Production and Organizations - - - Other
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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