The impact of R&D strategy and firm size on the returns to innovation
by Mario Kafouros, Chengqi Wang, George Lodorfos
International Journal of Entrepreneurship and Small Business (IJESB), Vol. 8, No. 4, 2009

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.

Online publication date: Sat, 23-May-2009

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