TY - JOUR
T1 - Corporate R&D and firm efficiency
T2 - Evidence from Europe's top R&D investors
AU - Kumbhakar, S.C.
AU - Ortega-Argilés, R.
AU - Potters, Lesley
AU - Vivarelli, Marco
AU - Voigt, Peter
PY - 2011/5/11
Y1 - 2011/5/11
N2 - The main objective of this study is to investigate the impact of corporate research and development (R&D) activities on firm performance, measured by labour productivity. To this end, the stochastic frontier technique is used on a unique unbalanced longitudinal dataset comprising top European R&D investors over the period 2000-2005. In this framework, this study quantifies technical inefficiency of individual firms. From a policy perspective, the results of this study suggest that if the aim is to leverage firms' productivity, the emphasis should be put on supporting corporate R&D in high-tech sectors and, to some extent, in medium-tech sectors. On the other hand, corporate R&D in the low-tech sector is found to have a minor effect in explaining productivity. Instead, encouraging investment in fixed assets appears important for the productivity of low-tech industries. Hence, the allocation of support for corporate R&D seems to be as important as its overall increase and an 'erga omnes' approach across all sectors appears inappropriate. However, with regard to technical efficiency, R&D intensity is found to be a pivotal factor in explaining firm efficiency and this turns out to be true for all industries.
AB - The main objective of this study is to investigate the impact of corporate research and development (R&D) activities on firm performance, measured by labour productivity. To this end, the stochastic frontier technique is used on a unique unbalanced longitudinal dataset comprising top European R&D investors over the period 2000-2005. In this framework, this study quantifies technical inefficiency of individual firms. From a policy perspective, the results of this study suggest that if the aim is to leverage firms' productivity, the emphasis should be put on supporting corporate R&D in high-tech sectors and, to some extent, in medium-tech sectors. On the other hand, corporate R&D in the low-tech sector is found to have a minor effect in explaining productivity. Instead, encouraging investment in fixed assets appears important for the productivity of low-tech industries. Hence, the allocation of support for corporate R&D seems to be as important as its overall increase and an 'erga omnes' approach across all sectors appears inappropriate. However, with regard to technical efficiency, R&D intensity is found to be a pivotal factor in explaining firm efficiency and this turns out to be true for all industries.
KW - Corporate R&D
KW - Productivity
KW - Stochastic frontier analysis
KW - Technical efficiency
UR - http://www.scopus.com/inward/record.url?eid=2-s2.0-84857913659&partnerID=MN8TOARS
U2 - 10.1007/s11123-011-0223-5
DO - 10.1007/s11123-011-0223-5
M3 - Article
SN - 0895-562X
VL - 37
SP - 125
EP - 140
JO - Journal of Productivity Analysis
JF - Journal of Productivity Analysis
IS - 2
ER -
