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Relation of Firm Size to R&D Productivity

Author

Listed:
  • Jinyoung Kim

    (Department of Economics, Korea University, Korea)

  • Sangjoon John Lee

    (College of Business, Alfred University, U.S.A.)

  • Gerald Marschke

    (Department of Economics, University at Albany¡XSUNY, U.S.A. NBER and IZA)

Abstract

Many studies have shown that small firms generate more patents per R&D dollar than large firms. Does this mean that small firms are more efficient innovators than large firms? In this paper we exploit a unique data set to reexamine the firm size-innovation relationship. Because firm-reported R&D expenditures may be a biased measure of R&D activities due to under-reporting by small firms, we use the number of inventors in the firm¡¦s employ as a measure of R&D inputs. We focus on the pharmaceutical and semiconductor industries, two industries that are prolific generators of homogenous innovations. As has been found elsewhere in the literature, we find that patents per R&D dollar decline with firm size for both industries. This contrasts with the relationship between patents per inventor and firm size. The average number of patents per inventor increases with size in the semiconductor industry. In the pharmaceutical industry, we find no relationship between the number of patents produced per inventor and firm size.

Suggested Citation

  • Jinyoung Kim & Sangjoon John Lee & Gerald Marschke, 2009. "Relation of Firm Size to R&D Productivity," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 8(1), pages 7-19, April.
    • Handle: RePEc:ijb:journl:v:8:y:2009:i:1:p:7-19
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    References listed on IDEAS

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    Cited by:

    1. Burak Dindaroglu, 2011. "R&D Productivity and Firm Size in Semiconductors and Pharmaceuticals: Evidence from Citation Yields," Working Papers 1101, Izmir University of Economics.
    2. Sungmin Park, 2015. "The R&D logic model: Does it really work? An empirical verification using successive binary logistic regression models," Scientometrics, Springer;Akadémiai Kiadó, vol. 105(3), pages 1399-1439, December.
    3. Christian Rammer & Dirk Czarnitzki & Alfred Spielkamp, 2009. "Innovation success of non-R&D-performers: substituting technology by management in SMEs," Small Business Economics, Springer, vol. 33(1), pages 35-58, June.
    4. Prabal De & Priya Nagaraj, 2014. "Productivity and firm size in India," Small Business Economics, Springer, vol. 42(4), pages 891-907, April.
    5. Maria JOSE SILVA & Gastão SOUSA & Jacinta MOREIRA & Jorge SIMÕES, 2011. "Innovation Activities in the Service Sector: Empirical Evidence from Portuguese Firms," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 1(6), pages 1-17, October.
    6. H. Phoebe Chan, 2011. "Do firms with larger patent portfolios create more new plant varieties in the US agricultural biotechnology industry?," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 20(8), pages 749-775, October.
    7. Adamu Jibir & Musa Abdu, 2021. "Human Capital and Propensity to Protect Intellectual Properties as Innovation Output: the Case of Nigerian Manufacturing and Service Firms," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(2), pages 595-619, June.
    8. Li, Junbao & Shi, Zhanzhong & He, Chengying & Lv, Chengshuang, 2023. "Peer effects on corporate R&D investment policies: A spatial panel model approach," Journal of Business Research, Elsevier, vol. 158(C).
    9. Seong-Sang Lee & Yeonbae Kim, 2009. "The Impact of Efficiency Parameters on Firms Innovative Activities: Evidence from Korean Firm-level data," TEMEP Discussion Papers 200924, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Nov 2009.
    10. Sangjoon Lee & Jinyoung Kim, 2004. "Research Scientist Productivity and Firm Size: Evidence from Panel Data on Inventors," Econometric Society 2004 Far Eastern Meetings 465, Econometric Society.
    11. Antonio Revilla & Zulima Fern�ndez, 2013. "Environmental Dynamism, Firm Size and the Economic Productivity of R&D," Industry and Innovation, Taylor & Francis Journals, vol. 20(6), pages 503-522, August.
    12. Jun Hong Park & Hyunseog Chung & Ki Hong Kim & Jin Ju Kim & Chulung Lee, 2021. "The Impact of Technological Capability on Financial Performance in the Semiconductor Industry," Sustainability, MDPI, vol. 13(2), pages 1-20, January.
    13. Salman Ali & Syed Mizanur Rahman, 2020. "R&D Expenditure in a Competitive Landscape: A Game Theoretic Approach," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 19(1), pages 47-60, June.
    14. Isabel Martínez Martín & Miguel Sánchez Galindo & César Pérez López & Rosa Santero Sánchez, 2019. "Evaluación del impacto del programa Redes de Innovación al Servicio de la Competitividad (RISC)," Hacienda Pública Española / Review of Public Economics, IEF, vol. 229(2), pages 59-86, June.
    15. Frosch, Katharina & Tivig, Thusnelda, 2007. "Age, human capital and the geography of innovation," Thuenen-Series of Applied Economic Theory 71, University of Rostock, Institute of Economics.

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    More about this item

    Keywords

    patents; innovation; labor productivity; research; firm size;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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