Firm Growth and R&D Expenditure

We apply a panel vector autoregression model to a firm-level longitudinal databaseto observe the co-evolution of sales growth, employment growth, profits growth andgrowth of R&D expenditure. Contrary to expectations, profit growth seems to havelittle detectable effect on R&D investment. Instead, firms appear to increase their totalR&D expenditure following growth in sales and growth of employment. In a sense, firmsbehave ‘as if’ they aim for a roughly constant ratio of R&D to employment (or sales).We observe heterogeneous effects for growing or shrinking firms however, suggesting thatfirms are less willing to reduce their R&D levels following a negative growth shock thanthey are willing to increase R&D after a positive shock...

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Year of publication:	2007-11-09
Authors:	Coad, Alexander ; Rao, Rekha
Institutions:	Max-Planck-Institut für Ökonomik <Jena> / Abteilung Evolutionsökonomik
Subject:	Unternehmen \| Arbeit \| Labor \| Unternehmenswachstum \| company growth

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Extent:	533504 bytes 32 p. application/pdf
Series:	Max-Planck-Institut für Ökonomik - Abteilung Evolutionsökonomik - Discussion Papers Discussion Paper #0710
Type of publication:	Book / Working Paper
Language:	English
Classification:	Management and organisation. Other aspects ; Ergonomic job analysis ; Individual Working Papers, Preprints ; No country specification
Source:	USB Cologne (business full texts)