The role of time in assessing the economic effects of R&D

Mario I. Kafouros, Chengqi Wang

Research output: Contribution to journalArticlepeer-review

Abstract

This study investigates the impacts of R&D on firm performance. It extends previous research by constructing alternative stocks of R&D‐Capital that take into account that time plays an important role in assessing the pay‐off of industrial research. The results show that even when we employed R&D‐Capitals that placed more emphasis on the industrial research that had been undertaken 7 years ago, the effects of R&D were very (statistically) significant and relatively high, thereby suggesting that the life of R&D (on average) tends to be long. The results however, vary across organizations depending on both firm size and the technological opportunities that a company faces. It appears that the depreciation rate of R&D investments is higher in the case of technologically sophisticated firms. In contrast, strategic investments in industrial research generate a relatively constant effect on the performance of other firms, supporting the notion that the corresponding returns for such firms decay slowly.
Original languageEnglish
Pages (from-to)233-251
JournalIndustry and Innovation
Volume15
Issue number3
DOIs
Publication statusPublished - 2008

Keywords

  • Research and development (R&D)
  • time lag
  • performance
  • innovation

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