Title: The impact of R&D strategy and firm size on the returns to innovation

Authors: Mario Kafouros, Chengqi Wang, George Lodorfos

Addresses: Centre for International Business, Leeds University Business School, University of Leeds, Leeds, LS2 9JT, UK. ' Nottingham University Business School, Jubilee Campus, Wollaton Road, Nottingham NG8 1BB, UK. ' Leeds Metropolitan University, Headingley Campus, Leeds LS6 3QL, UK

Abstract: Using a firm-level dataset of manufacturing firms, this study examines the economic returns to R&D in the UK. It contributes to the literature of innovation by investigating two firm-specific characteristics (firm size and R&D strategy) that may influence what a company itself gets for its own research efforts (private returns to R&D). The findings indicate that, on average, the rate of return to R&D is 0.33. However, the results show that the economic payoff for larger firms as well as for organisations that followed an R&D-intensive strategy is significantly higher, allowing such firms to improve their corporate performance. In contrast, the analysis indicates that less R&D-intensive and smaller firms cannot successfully appropriate the economic benefits of industrial research. The implications of these findings for academic research and regional economic development are discussed.

Keywords: R&D strategy; returns to innovation; firm size; economic development; small business; entrepreneurship; research and development; manufacturing firms; regional development.

DOI: 10.1504/IJESB.2009.025698

International Journal of Entrepreneurship and Small Business, 2009 Vol.8 No.4, pp.550 - 566

Published online: 23 May 2009 *

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