Title: Decomposing the temporal variation in the business-sector private R&D intensity

Authors: Juan Fernández-Sastre; John Cajas-Guijarro; Wilson Pérez-Oviedo

Addresses: Latin American Faculty of Social Sciences (FLACSO-Ecuador), La Pradera E7-174 y Av. Diego de Almagro, Quito, Ecuador ' Universidad Central del Ecuador, Avenida Universitaria y América, Quito, Ecuador ' Latin American Faculty of Social Sciences (FLACSO-Ecuador), La Pradera E7-174 y Av. Diego de Almagro, Quito, Ecuador

Abstract: This paper decomposes the variation in the business-sector R&D intensity, specifically the fraction financed through private resources, into changes in the firm characteristics, firm-specific R&&D investment policies, external financing of R&D, and firm-specific policies related to supplementing/replacing the latter with private resources. First, we estimate the relationship between R&D intensity and external financing using micro-econometric models and controlling for selection bias (Vella, 1993). Then, we apply a 'three-fold' decomposition which improves the Blinder-Oaxaca procedure (Jann, 2008). We find that business-sector R&D intensity is more affected by firm-specific investment policies than by firm characteristics. Also, external financing and firm-specific policies related to supplementing/replacing external financing have major effects on R&D intensity. Although several effects are individually significant, overall (except for the period 2008-2013), the estimated value of the business-sector private R&D intensity has no significant variations since the individual effects balance each other out.

Keywords: R&D intensity; business sector; innovation policies; selection bias; 'threefold' decomposition.

DOI: 10.1504/IJFIP.2022.128014

International Journal of Foresight and Innovation Policy, 2022 Vol.16 No.1, pp.1 - 32

Accepted: 16 Jul 2021
Published online: 04 Jan 2023 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article