Innovation, R&D and Productivity - assessing alternative specifications of CDM-models

This paper applies a CDM-model framework to depict the successive links (correlations) between (i) innovation expenditure, (ii) innovation output, and (iii) firm productivity. The CDM model has become popular in many countries among scholars using data from the Community Innovation Survey (CIS). First, the study contrasts a general structural OECD version of the model against a model with country-specific design. Second, the study examines the gains from separating the labour force into ordinary and knowledge labour – as a means to avoid double counting of R&D investments. Third, the paper examines the difference between recognising a firm as a member of an unspecified company group versus a multinational group. Fourth, the paper explores how well sales per employee serves as a proxy for labour productivity proper. Fifth, the paper scrutinises the quality of CIS information by comparing key variables from the voluntary CIS survey with the same variables (for the same firms) recorded in the compulsory and audited register data in Sweden.