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R&D and non-linear productivity growth

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  • Kancs, d’Artis
  • Siliverstovs, Boriss

Abstract

The present paper studies the relationship between R&D investment and firm productivity growth by explicitly modelling non-linearities in the R&D–productivity relationship. We employ a two step estimation approach, and match two firm-level data sets for OECD countries, which allows us to relax the linearity assumption of the canonical Griliches (1979) knowledge capital model. Our results suggest that: (i) R&D investment increases firm productivity with an average elasticity of 0.15; (ii) the impact of R&D investment on firm productivity is different at different levels of R&D intensity—the productivity elasticity ranges from −0.02 for low levels of R&D intensity to 0.33 for high levels of R&D intensity implying that the relationship between R&D expenditures and productivity growth is highly non-linear, and only after a certain critical mass of knowledge is accumulated, is productivity growth significantly positive; (iii) there are important inter-sectoral differences with respect to R&D investment and firm productivity—firms in high-tech sectors not only invest more in R&D, but also achieve more in terms of productivity gains related to research activities.

Suggested Citation

  • Kancs, d’Artis & Siliverstovs, Boriss, 2016. "R&D and non-linear productivity growth," Research Policy, Elsevier, vol. 45(3), pages 634-646.
    • Handle: RePEc:eee:respol:v:45:y:2016:i:3:p:634-646
    DOI: 10.1016/j.respol.2015.12.001
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    More about this item

    Keywords

    R&D investment; Firm productivity; Generalised propensity score;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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