Impact of R&D on productivity: Firm-level evidence from Finland

This study analyses how R&D expenditure impacts the productivity of companies. We analyse the productivity impact of R&D using a large panel dataset of Finnish firms over a nine‐year period from 1996 to 2004. Our results are two-fold. In the short run (in 1-2 years) we find no statistically significant productivity impact of R&D. However, R&D does have an economically and statistically significant impact when we take into account R&D efforts made 3‐5 years before. Hence, a window of almost 5 years is needed to capture the productivity impact of R&D.