Determinants of Firm R&D: Evidence from Swedish Firm Level Data

This paper analyses determinants of firm R&D and if predictions from the model of creative destruction is supported by data using matched employer-employee longitudinal data on the Swedish manufacturing industry. In particular, we analyse the impact of competition on R&D. Using various measures of competition, results indicate that competition is likely to contract firm R&D expenditures. We do not find strong support for the expected large-firm advantage in R&D through scale effects. In addition, firm R&D appears positively correlated with its own export and to the R&D-intensity of other firms within the same concern, indicating the existence of knowledge spillovers.