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Productivity Growth and R&D at the Business Level: Results From the PIMS Data Base

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  • Kim B. Clark
  • Zvi Griliches

Abstract

This paper presents the results of a study of productivity growth and R&D in the 1970s using data on narrowly defined 'business units within a firm. Estimates are developed under different assumptions about technology ,industry effects, and changes in the return to R&D over time. The R&D data are broken down into process and product expenditures, and some information is available on past success in developing proprietary technology, andontheincidenceofma3or changes in technology in the recent past. The results suggest a significant relationship between R&D and the growth of productivity; in versions using total factor productivity as the dependent variable, the estimated rate of return to R&D investment is about 20 percent. We find some evidence that R&D has its biggest effect on productivity in those markets where major changes in technology have occurred in the recent past. Previous success in developing proprietary process technology affects total factor productivity directly, but appears to have little effect on estimated returns to R&D. The notion that the productivity of R&D declined in the l970sfinds Little support in this data. Irrespective of model specification, trends in the R&D coefficient are substantively arid statistically insignificant. Our calculations suggest that reduced investment in R&D may have accounted for at least 10 percent of the decline in total factor productivity growth in the l970s.

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  • Kim B. Clark & Zvi Griliches, 1982. "Productivity Growth and R&D at the Business Level: Results From the PIMS Data Base," NBER Working Papers 0916, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0916
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    1. Pakes, Ariel & Schankerman, Mark A., 1978. "The Rate of Obsolescence of Knowledge, Research Gestation Labs, and the Private Rate of Return to Research Resources," Working Papers 78-13, C.V. Starr Center for Applied Economics, New York University.
    2. Zvi Griliches & Jacques Mairesse, 1981. "Productivity and R and D at the Firm Level," NBER Working Papers 0826, National Bureau of Economic Research, Inc.
    3. Griliches, Zvi, 1980. "R & D and the Productivity Slowdown," American Economic Review, American Economic Association, vol. 70(2), pages 343-348, May.
    4. Zvi Griliches, 1998. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," NBER Chapters,in: R&D and Productivity: The Econometric Evidence, pages 17-45 National Bureau of Economic Research, Inc.
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    1. Thirtle, Colin, 1986. "The Production Function Approach to the Relationship Between Productivity Growth and R & D," Manchester Working Papers in Agricultural Economics 232791, University of Manchester, School of Economics, Agricultural Economics Department.
    2. Ugur, Mehmet & Trushin, Eshref & Solomon, Edna & Guidi, Francesco, 2016. "R&D and productivity in OECD firms and industries: A hierarchical meta-regression analysis," Research Policy, Elsevier, vol. 45(10), pages 2069-2086.
    3. Lichtenberg, Frank R & Siegel, Donald, 1991. "The Impact of R&D Investment on Productivity--New Evidence Using Linked R&D-LRD Data," Economic Inquiry, Western Economic Association International, vol. 29(2), pages 203-229, April.
    4. Jones, Charles I & Williams, John C, 2000. "Too Much of a Good Thing? The Economics of Investment in R&D," Journal of Economic Growth, Springer, vol. 5(1), pages 65-85, March.
    5. Charles I. Jones & John C. Williams, 1998. "Measuring the Social Return to R&D," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1119-1135.
    6. Giuseppe Medda & Claudio Piga, 2014. "Technological spillovers and productivity in Italian manufacturing firms," Journal of Productivity Analysis, Springer, vol. 41(3), pages 419-434, June.
    7. Christian Awuku-Budu & Leo Sveikauskas, 2015. "Allocation of Company Research and Development Expenditures to Industries Using a Tobit Model," Working Papers 15-42, Center for Economic Studies, U.S. Census Bureau.
    8. Nesta, Lionel, 2008. "Knowledge and productivity in the world's largest manufacturing corporations," Journal of Economic Behavior & Organization, Elsevier, vol. 67(3-4), pages 886-902, September.
    9. Jacques Mairesse & Mohamed Sassenou, 1991. "R&D Productivity: A Survey of Econometric Studies at the Firm Level," NBER Working Papers 3666, National Bureau of Economic Research, Inc.
    10. David Popp, 2006. "They Don'T Invent Them Like They Used To: An Examination Of Energy Patent Citations Over Time," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(8), pages 753-776.
    11. Hall, Bronwyn H. & Mairesse, Jacques & Mohnen, Pierre, 2010. "Measuring the Returns to R&D," Handbook of the Economics of Innovation, Elsevier.
    12. Tony Buxton & Gerry Kennally, 2004. "Comparison of excess social rates of return to product and process R&D," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 13(6), pages 509-521.
    13. Steven G. Allen, 1987. "Productivity Levels and Productivity Change Under Unionism," NBER Working Papers 2304, National Bureau of Economic Research, Inc.
    14. Valdemar Smith & Mogens Dilling-Hansen & Tor Eriksson & Erik Strøjer Madsen, 2004. "R&D and productivity in Danish firms: some empirical evidence," Applied Economics, Taylor & Francis Journals, vol. 36(16), pages 1797-1806.
    15. Lionel Nesta, 2005. "Knowledge and Productivity in the World's Largest Manufacturing Corporations Level:Panel Data analysis on Compustat and Patent data," Documents de Travail de l'OFCE 2005-17, Observatoire Francais des Conjonctures Economiques (OFCE).
    16. Daniel J. Wilson, 2002. "Is Embodied Technology the Result of Upstream R&D? Industry-Level Evidence," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(2), pages 285-317, April.
    17. Tribo Gine, José Antonio & Alfaro, José A., 2001. "Managerial turnover and worker turnover," DEE - Working Papers. Business Economics. WB wb011304, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    18. Emi Nakamura & Masao Nakamura (presenter) & Takanobu Nakajima, 2004. "Measuring Firms’ R&D Effects on Technical Progress: Japan in the 199," Econometric Society 2004 Far Eastern Meetings 414, Econometric Society.
    19. Eliza IRIMIA (DUMITRAªCU) & Silvia STÃNOIU, 2013. "Social Responsibility in the Context of Company Performance," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 14(1), pages 175-183, March.
    20. David Popp, 2005. "They Don't Invent Them Like They Used To: An Examination of Energy Patent Citations Over Time," NBER Working Papers 11415, National Bureau of Economic Research, Inc.
    21. Tsai, Kuen-Hung & Wang, Jiann-Chyuan, 2008. "External technology acquisition and firm performance: A longitudinal study," Journal of Business Venturing, Elsevier, vol. 23(1), pages 91-112, January.
    22. Luh, Yir-Hueih & Chang, Sheng-Kai, 1997. "Building the dynamic linkages between R & D and productivity growth," Journal of Asian Economics, Elsevier, vol. 8(4), pages 525-545.

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