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A Functional-Form-Free Test of the Research and Development/Firm Size Relationship

Author

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  • Holmes, James M
  • Hutton, Patricia A
  • Weber, Edward

Abstract

Parametric testing of the relationship between research and development (R&D) and firm size is limited by the hypothesized functional form, predominantly assumed to be linear in the logarithms of both variables. With a transformation of variables, the null hypothesis of constant returns to scale can be tested employing the multiple-rank F-test procedure. The findings of this analytical approach suggest that R&D intensity varies with firm size in some industries but not in others, and where it does vary, there is more evidence that R&D intensity is negatively rather than positively related to firm size.

Suggested Citation

  • Holmes, James M & Hutton, Patricia A & Weber, Edward, 1991. "A Functional-Form-Free Test of the Research and Development/Firm Size Relationship," Journal of Business & Economic Statistics, American Statistical Association, vol. 9(1), pages 85-90, January.
    • Handle: RePEc:bes:jnlbes:v:9:y:1991:i:1:p:85-90
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    Cited by:

    1. Harris, Richard & Trainor, Mary, 2009. "Why do some firms undertake R&D whereas others do not?," LSE Research Online Documents on Economics 33212, London School of Economics and Political Science, LSE Library.
    2. Saha, Souresh, 2014. "Firm's objective function and product and process R&D," Economic Modelling, Elsevier, vol. 36(C), pages 484-494.
    3. John E. Ettlie, 1998. "R&D and Global Manufacturing Performance," Management Science, INFORMS, vol. 44(1), pages 1-11, January.

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