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Research Scientist Productivity and Firm Size: Evidence from Panel Data on Investors

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  • Gerald Marschke
  • Jinyoung Kim
  • Sangjoon John Lee

Abstract

It has long been recognized that worker wages and possibly productivity are higher in large firms. Moreover, at least since Schumpeter (1942) economists have been interested in the relative efficiency of large firms in the research and development enterprise. This paper uses longitudinal worker-firm-matched data to examine the relationship between the productivity of workers specifically engaged in innovation and firm size in the pharmaceutical and semiconductor industries. In both industries, we find that inventors' productivity increases with firm size. This result holds across different specifications and even after controlling for inventors' experience, education, the quality of other inventors in the firm, and other firm characteristics. We find evidence in the pharmaceutical industry that this is partly accounted for by differences between how large and small firms organize R&D activities.

Suggested Citation

  • Gerald Marschke & Jinyoung Kim & Sangjoon John Lee, 2004. "Research Scientist Productivity and Firm Size: Evidence from Panel Data on Investors," Discussion Papers 04-06, University at Albany, SUNY, Department of Economics.
  • Handle: RePEc:nya:albaec:04-06
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    File URL: http://www.albany.edu/economics/research/workingp/2004/scientprod.pdf
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    References listed on IDEAS

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    1. Walter Y. Oi & Todd L. Idson, 1999. "Workers Are More Productive in Large Firms," American Economic Review, American Economic Association, vol. 89(2), pages 104-108, May.
    2. Jensen, Elizabeth J, 1987. "Research Expenditures and the Discovery of New Drugs," Journal of Industrial Economics, Wiley Blackwell, vol. 36(1), pages 83-95, September.
    3. Manuel Trajtenberg, 1990. "A Penny for Your Quotes: Patent Citations and the Value of Innovations," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 172-187, Spring.
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    5. Dunne, Timothy & Schmitz, James A, Jr, 1995. "Wages, Employment Structure and Employer Size-Wage Premia: Their Relationship to Advanced-Technology Usage at US Manufacturing Establishments," Economica, London School of Economics and Political Science, vol. 62(245), pages 89-107, February.
    6. Cohen, Wesley M & Klepper, Steven, 1996. "A Reprise of Size and R&D," Economic Journal, Royal Economic Society, vol. 106(437), pages 925-951, July.
    7. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, January.
    8. Stephan, Paula E., 2010. "The Economics of Science," Handbook of the Economics of Innovation, Elsevier.
    9. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1027-1059, October.
    10. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
    11. Hausman, Jerry & Hall, Bronwyn H & Griliches, Zvi, 1984. "Econometric Models for Count Data with an Application to the Patents-R&D Relationship," Econometrica, Econometric Society, vol. 52(4), pages 909-938, July.
    12. Bronwyn H. Hall & Adam B. Jaffe & Manuel Trajtenberg, 2001. "The NBER Patent Citation Data File: Lessons, Insights and Methodological Tools," NBER Working Papers 8498, National Bureau of Economic Research, Inc.
    13. Kenneth R. Troske, 1999. "Evidence On The Employer Size-Wage Premium From Worker-Establishment Matched Data," The Review of Economics and Statistics, MIT Press, pages 15-26.
    14. Walter Oi, 1983. "The Fixed Employment Costs of Specialized Labor," NBER Chapters,in: The Measurement of Labor Cost, pages 63-122 National Bureau of Economic Research, Inc.
    15. Jinyoung Kim & Sangjoon John Lee & Gerald Marschke, 2009. "Relation of Firm Size to R&D Productivity," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 8(1), pages 7-19, April.
    16. Rebecca Henderson & Iain Cockburn, 1996. "Scale, Scope, and Spillovers: The Determinants of Research Productivity in Drug Discovery," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 32-59, Spring.
    17. Lillard, Lee A & Weiss, Yoram, 1979. "Components of Variation in Panel Earnings Data: American Scientists, 1960-70," Econometrica, Econometric Society, vol. 47(2), pages 437-454, March.
    18. Acs, Zoltan J & Audretsch, David B, 1987. "Innovation, Market Structure, and Firm Size," The Review of Economics and Statistics, MIT Press, vol. 69(4), pages 567-574, November.
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    Citations

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    Cited by:

    1. ONISHI Koichiro & NAGAOKA Sadao, 2012. "Life-cycle Productivity of Industrial Inventors: Education and other determinants," Discussion papers 12059, Research Institute of Economy, Trade and Industry (RIETI).
    2. Jinyoung Kim & Sangjoon John Lee & Gerald Marschke, 2009. "Relation of Firm Size to R&D Productivity," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 8(1), pages 7-19, April.
    3. Hoisl, Karin, 2007. "Tracing mobile inventors--The causality between inventor mobility and inventor productivity," Research Policy, Elsevier, pages 619-636.
    4. Sridhar, Kala Seetharam & Wan, Guanghua, 2010. "Firm location choice in cities: Evidence from China, India, and Brazil," China Economic Review, Elsevier, vol. 21(1), pages 113-122, March.
    5. William Latham & Christian Le Bas, 2011. "Causes, Consequences and Dynamics of ‘Complex’ Distributions of Technological Activities: The Case of Prolific Inventors," Chapters,in: Handbook on the Economic Complexity of Technological Change, chapter 9 Edward Elgar Publishing.
    6. Toivanen, Otto & Väänänen, Lotta, 2010. "Returns to Inventors," CEPR Discussion Papers 7744, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Patents; Innovation; Labor productivity; Research; Firm size;

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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