Firm size and compositions of R&D expenditures: evidence from a panel of R&D performing manufacturing firms

The effect of firm size on diverse compositions of R&D expenditures is analysed in detail using firm-level data on the Korean manufacturing sector. On the grounds that each type of R&D activity differs in terms of salability in disembodied form and growth potential due to innovation, a distinction between product vs. process, and new vs. incremental R&D is made. Empirical tests show that the firm size is significantly associated with both the new and incremental R&D. Moreover, firm size is found to be significantly associated with other types of R&D compositions such as the share of R&D devoted to incremental innovation and multidimensional combinations of product, process, new and incremental R&D. These findings support the idea that large firms possess innovative advantages over smaller firms and firm size is an important determinant for firms’ heterogeneous R&D activities. We also discuss the limitations and the implications of the findings.     

R&D policy instruments – a critical review of what we do and don’t know

In recent years, the term “policy instrument” has been used frequently with regard to R&D policy and innovation policy. This article examines the development of the term as part of a body of research known as “policy design”. Over the last 50 years, there has been substantial progress in setting policy design on a more systematic basis, with the development of established concepts and analytical frameworks, including various taxonomies of policy instruments. However, with just a few exceptions, this body of research seems to have had little impact in the world of R&D policy. The paper reviews the literature on R&D policy instruments, identifies a number of challenges for R&D policy instruments in the light of four transitions and sets out a research agenda for the study of R&D policy instruments, before ending with a number of conclusions.     

Modes of inbound knowledge flows: are cooperation and outsourcing really complementary?

This study examines the relationship between breadths of two different modes of external knowledge: R&D outsourcing and cooperation. Building upon transaction costs literature and literature on research partner breadth and R&D outsourcing, we hypothesise an U-inverted relationship between outsourcing breadth and innovation performance and a complementary relationship between R&D outsourcing and R&D cooperation. The model is tested on a large sample based on CIS survey for Spain. The empirical analysis confirms the U-inverted relationship between outsourcing breadth and innovation and also reveals an interesting result: the complementary effect of R&D cooperation varies with the level of R&D outsourcing breadth and it is not confirmed for low and medium levels of R&D outsourcing breadth. The results have important implications for theory on the selection of different modes of inbound open innovation and for managers and their cooperation and outsourcing strategies.     

Is there a fallacy of composition of external R&D? An empirical assessment of the impact of quasi-internal,external and offshored R&D

Empirical studies at the individual firm level often find a positive impact of external R&D on innovation. However, external R&D sourcing might produce an impoverishment of the local knowledge base and thus damage innovation production at the regional level. To address this possible fallacy of composition, we first review the various forms of ‘external’ R&D. We then use the French R&D survey to assess the impact of four different ways of transacting or collaborating on R&D: onshore affiliate external R&D, offshore affiliate external R&D, onshore non-affiliate and offshore non-affiliate external R&D. We then estimate knowledge production functions on the 94 metropolitan French NUTS3 regions observed between 1997 and 2008, differentiating internal R&D and these categories of external R&D. We obtain that the impact of onshore non-affiliate external R&D is significantly negative. The other external R&D categories are non-significant and we do not detect any complementarity between internal and external R&D.     

Heterogeneous Partners,R&D cooperation and corporate innovation capability: Evidence from Chinese manufacturing firms

In this paper, we examine the differential impact of cooperation with heterogeneous partners on firms' innovation capabilities. We use the number of joint patent applications of Chinese manufacturing firms from 2008 to 2018 to measure cooperation with different types of partners and the number of corporate patents to measure the innovation capability of firms. The results indicate that R&D cooperation with other enterprises, universities, and research institutions all have a significantly positive impact on the innovation capability of enterprises. However, R&D cooperation with universities or research institutions has a higher positive impact on innovation capability than that with other firms. Different internal and external factors moderate the relationship between heterogeneous partners and the innovation capability of firms. Specifically, firms with higher absorptive capacity will benefit more from R&D cooperation with corporate partners. In contrast, in industries with higher market concentration or where firms are at the technological frontier, cooperation with universities will positively impact their innovation capabilities. Further research demonstrates that absorptive capacity has a more positive moderating effect when the cooperation is between firms in the same industry, compared to R&D cooperation between firms in different industries.     

The role of government-industry-academia partnership in business incubation: Evidence from new R&D institutions in China

it is very important to encourage the incubation of new companies for innovative economic growth. Many countries in the world are encouraging “innovation orchards” in the form of government-industry-academia partnership to facilitate the incubation of new technology enterprises. The research focuses on the impact of this partnership between the government, industry, and academia in establishing new R&D institutions on business incubation. Specifically, the research aims to investigate what is the separate effect of the government, enterprises, universities, and public institutions in the establishment of new R&D institutions on enterprise incubation, and the role of cooperation between government-enterprise-academia in the enterprise incubation of new R&D institutions. In empirical tests using data from the 2020 official survey of the Ministry of Science and Technology of China, the results show that for each single cooperator, participation in the establishment of governments, academia has a positive impact on start-ups, while the participation of enterprises has no significant impact. In terms of cooperation, the co-established new R&D institutions are better in business incubation than the single establishment of new R&D institutions. The cooperation between government and academia in the establishment of new R&D institutions has a positive effect on business incubation, and other types of cooperation between government-industry, industry-academia, and government-industry-academia have no significant impact on business incubation. The research conclusion can provide a policy reference for optimizing the holding mode of new R&D institutions.     

Foreign Subsidiaries and Technology Sourcing in Spain

Firms acquire external technological knowledge via different channels. In this paper, we compare the technology sourcing of foreign subsidiaries and domestic firms looking at domestic R&D outsourcing, international R&D outsourcing, domestic cooperation for innovation and international cooperation for innovation. We use data from the Spanish Technological Innovation Panel for the years 2005–2009 for 10,206 innovative firms operating in Spain. We apply a multivariate probit specification which allows for systematic correlations among the different choices. The results show that the different technology sourcing choices are interdependent and that foreign subsidiaries show a different pattern of external technology sourcing. Compared to affiliated domestic companies, foreign subsidiaries show a smaller propensity for external technology sourcing via R&D outsourcing from independent firms in the host country, for international R&D outsourcing and for international cooperation for innovation. In contrast, foreign subsidiaries show a greater propensity for domestic cooperation for innovation. However, foreign subsidiaries are not a homogenous group in this respect.     

Economic crisis and company R&D in Spain: do regional and policy factors matter?

The economic crisis which began in 2008 has had a far-reaching impact, including effects on the innovation behaviour of firms. Many companies have reduced their innovation-related activities, although some firms have been more resilient than others. Using a representative microdata panel of Spanish firms, we study the probability of companies abandoning in-house R&D during the crisis and its relationship to regional and policy factors. We find significant regional heterogeneity related to regional economic size and the type of the regional innovation system; regional government R&D support only reduces R&D abandonment rates in regions where a strong system of knowledge exploitation is in place.     

Determinants of internal and external R&D offshoring: evidence from Spanish firms

This paper analyses the determinants of R&D offshoring of Spanish firms using information from the Panel of Technological Innovation. We find that being an exporter, international technological cooperation, continuous R&D engagement, applying for patents, being a foreign subsidiary, and firm size are factors that positively affect the decision to offshore R&D. In addition, we find that a lack of financing is an obstacle relatively more important for independent firms than for firms that belong to business groups. For these latter, we also obtain that the factors that influence the decision to offshore R&D differ depending on whether the firm purchases the R&D services within the group or through the market: a higher degree of importance assigned to internal sources of information for innovation as compared to market sources increases (decreases) the probability of R&D offshoring only through the group (market).     

Application and success of R&D subsidies: what is the role of firm age?

This article evaluates the propensity of firms to apply for R&D public grants, their capacity for obtaining subsides and how these relate to the firm age. This analysis is particularly relevant in understanding why young firms may be more or less successful in their application for public subsidies. Using data from an extensive database of 19,236 firms in Catalonia, we estimate a maximum likelihood probit model with sample selection. Our results show that firm age does not exert a significant direct impact on the application propensity in R&D public call, but younger firms tend to show a larger propensity to receive an R&D subsidy. They also show that firm age exerts a moderating role through different internal resources. They highlight the need to design R&D public policies that explicitly favour applications by young firms to help overcome their obstacles to innovation.     

Post-Catch-Up Strategy for Medium-Sized South Korean Firms: Improving Technological Capabilities by Balancing R&D Intensity and Open Innovation

Abstract

This study examines how R&D intensity and open innovation affect the technological capabilities of firms in newly-developed countries, such as South Korea. East Asian latecomers are transitioning from a catch-up phase toward becoming leaders, and they are engaging in open innovation activities to drive this transition. This research quantitatively analyzes three kinds of open innovation activities—outside-in, inside-out, and coupled—to investigate their influence upon technological capabilities, while also considering the effect of R&D intensity. Data from 75 South Korean medium-sized firms were analyzed, and two major findings are reported. First, technological capabilities are enhanced by some open innovation activities and by R&D intensity. Second, R&D intensity negatively moderates the impact of open innovation activities on technological capabilities. Therefore, it may be concluded that firms with relatively low R&D intensity will gain the most benefit from increasing their open innovation activities.     

Using patents and publications to assess R&D efficiency in the states of the USA

Even with the USA spending the largest amounts in R&D, its share in total patent grants worldwide has been declining. This decline is also evident in its share of world scientific publications. These developments have been termed by some as the “American Paradox”. Extant research on R&D efficiency and technological innovation capability has considered the USA as a homogeneous entity and has not focused at the sub-national level. This paper analyses the R&D efficiency of 50 US states and the District of Columbia. R&D efficiency is calculated as the ratio of patents granted and scientific publications to R&D expenditures. Only 14 states out of the 51 regions are found to exhibit positive changes in R&D efficiency between 2004 and 2008. Comparing this performance with that of the BRICS nations over the same period we find that Brazil, India, China and South Korea show significant improvements in R&D efficiency with India taking the lead. This research identifies the states in the US with the highest R&D efficiency and presents benchmarks which can be followed by policy interventions. The paper highlights the importance of conducting analyses of R&D efficiency using patents and publications at the sub-national level for informed policy making.     

Systemic aspects of R&D policy subsidies for R&D collaborations and their effects on private R&D

This paper analyses how context- and time-dependent factors determine the impact of R&D subsidies on firm behaviour with respect to private R&D expenditures. Based on German R&D survey data, we combine propensity score matching with a difference-in-difference estimator in order to measure the causal influence of public direct R&D project funding on firm behaviour. Our results indicate that (i) repeated participation in R&D projects on average leads to a higher increase in R&D expenditures than once-off funding; (ii) the aggregate effect of R&D funding on R&D expenditures of business firms is somewhat higher for business–business collaboration projects than for science–business collaboration projects; (iii) R&D expenditures of business firms that cooperate with science show a higher share of external R&D spending. Results of one particular cluster programme indicate that at least the short-term development of R&D does not so much depend on which programme direct R&D project funding is applied to.     

R&D,worker training and innovation: firm-level evidence

Firms that invest in R&D and also in worker training are expected to be successful innovators; yet, the extent to which these investments are mutually reinforcing has not been established. This paper addresses that question by analysing the decision to innovate and the number of innovations introduced. Our findings, which are based on a sample of Spanish manufacturing firms, confirm that R&D is more effective when firms also invest in worker training. Moreover, for some smaller firms, investing in workers’ skills (via training programs) boosts innovation even in absence of R&D. Meanwhile, on-the-job training in large firms might serve mainly to reinforce the effects of R&D. Regarding the number of innovations, our result signals that a higher absorptive capacity via higher ability of qualified workers (through schooling or training) leads to improved innovation performance.     

The Role of Time in Assessing the Economic Effects of R&D

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.     

Business Group Affiliation and R&D

This paper analyzes whether belonging to a business group enhances firms' propensity for and intensity of R&D based on the greater opportunities to finance and co-ordinate R&D strategies and internalize knowledge spillovers. Compared with the existing literature, this paper has the following novelties: (a) it examines how the organization and diversification of business groups influence the R&D investment of affiliated firms; (b) it analyzes the role of R&D spillovers among affiliated firms; and (c) it distinguishes between propensity for and intensity of R&D. We find that less diversified groups are more likely to centralize R&D, while in more diversified groups firms are more likely to be autonomous. We find that controlled companies are more likely to benefit from knowledge spillovers than firms at the head of the group. Finally, we find that R&D autonomy is significantly associated with both a higher propensity for and intensity of R&D in controlled companies.     

Policy-Induced Environmental Technology and Inventive Efforts: Is There a Crowding Out?

Substantial policy effort is devoted to stimulate environmentally friendly technology through regulation and subsidies. Since innovation is a crucial productivity driver, a potential crowding out of inventive efforts in affected firms may increase the cost of regulation. We study the effects of regulation-induced environmental technology on innovation activities for a sample of firms in Germany. We find some evidence for a crowding out of firms' in-house R&D, especially for firms facing financing constraints. Innovation outcomes and investments in innovation-related fixed assets are not affected. Moreover, subsidy-backed environmental technology does not crowd out R&D.     

The Catalysing Role of In-House R&D in Fostering Complementarity Among Innovative Inputs

While several studies have investigated the relationship between internal and external sources of innovation, no clear-cut result has emerged so far, suggesting the possibility that the nature of such interaction—far from being an absolute property of the innovative process—may instead be a relative one, contingent upon the nature and the level of innovative inputs a firm has invested in. Using microdata from the third Italian Community Innovation Survey, we test under what conditions the nature of the interactions between four different innovative inputs (internal and external R&D, embodied and disembodied technological acquisition) is one of complementarity or substitutability. Two are the main findings of our study: (i) internal R&D and embodied technological acquisitions turn out to be complementary only after a minimum threshold of in-house R&D expenditure has been overcome, being substitutive otherwise; (ii) investing in internal R&D also affects the nature of the relationships between alternative external sources of innovation, whose interaction proves to be complementary only for firms that invest in internal R&D.     

A Business Intelligence Approach to Monitoring and Trend Analysis of National R&D Indicators

The economic growth and competitiveness of countries is strongly influenced by their national research and development (R&D) systems. Hence, national R&D managers must make appropriate decisions to develop their R&D systems. For this purpose, an integrated view on the dimensions of national R&D systems is much needed. Due to the distribution of relevant data sources for national, R&D indicators and the complexity of national R&D systems, establishing an integrated view is challenging. In this article, we propose a business intelligence architecture to monitor, analyze, and forecast national, R&D indicators. Data for these indicators are integrated from heterogeneous data sources. In a case study focusing on Iranian R&D indicators, a prototype system is designed and implemented to evaluate its effectiveness in practice. After monitoring the indicators using online analytical processing, trends for the indicators across 11 years are forecasted using time series analysis models. The prototype system provides an integrated view of the Iranian R&D system, so that national R&D managers can use the developed system for monitoring and trend analysis of Iranian R&D indicators. As a result of the analysis of these trends, implications and recommendations for the future of the Iranian R&D system are presented.     

Productivity of R&D institution: The case of Indonesia

This study analyzes the performance of Indonesian R&D institutions based on R&D productivity. By applying an institutional approach, the effects of collective determinants such as quality of researcher, R&D budgets, locations and ages of R&D institutions on productivity are considered. Our findings show that these performance variables had strong and significant effects on R&D productivity. A national innovation system should be developed in developing countries with different models from those used in developed countries. The non-economic dimension is essential in developing national innovation systems in developing countries such as Indonesia.