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The Effect of Research & Development Investments on New Firm Entry

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  • Panagiotis Kotsios
  • Aglaia Gkampoura
  • Vaios Kotsios

Abstract

The entry of new competitors operates as a balancing force against high levels of industrial concentration and the abuse of dominant position by firms with large market shares. This paper¡¯s goal is to examine theoretically the impact of Research & Development investments on new firm entry. While dominant economic theory supports that large R&D investments are a prerequisite for technological change and economic growth, so that large incumbent firms are considered to have an advantage against new, typically smaller firms, theoretical and empirical research has shown that this may not be the case. Small firms¡¯ contribution in innovation and economic development is far greater than expected.

Suggested Citation

  • Panagiotis Kotsios & Aglaia Gkampoura & Vaios Kotsios, 2015. "The Effect of Research & Development Investments on New Firm Entry," Research in World Economy, Research in World Economy, Sciedu Press, vol. 6(1), pages 112-117, March.
    • Handle: RePEc:jfr:rwe111:v:6:y:2015:i:1:p:112-117
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    References listed on IDEAS

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    3. Kleinknecht, Alfred, 1987. "Measuring R&D in Small Firms: How Much Are We Missing?," Journal of Industrial Economics, Wiley Blackwell, vol. 36(2), pages 253-256, December.
    4. Preston R. Fee & Hugo M. Mialon & Michael A. Williams, 2004. "What Is a Barrier to Entry?," American Economic Review, American Economic Association, vol. 94(2), pages 461-465, May.
    5. Chris Freeman & Luc Soete, 1997. "The Economics of Industrial Innovation, 3rd Edition," MIT Press Books, The MIT Press, edition 3, volume 1, number 0262061953, April.
    6. Pavitt, Keith & Robson, Michael & Townsend, Joe, 1987. "The Size Distribution of Innovating Firms in the UK: 1945-1983," Journal of Industrial Economics, Wiley Blackwell, vol. 35(3), pages 297-316, March.
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    Cited by:

    1. D'Al, Francesco & Santarelli, Enrico & Vivarelli, Marco, 2024. "The KSTE+I approach and the advent of AI technologies: evidence from the European regions," GLO Discussion Paper Series 1473, Global Labor Organization (GLO).
    2. D’Alessandro, Francesco & Santarelli, Enrico & Vivarelli, Marco, 2024. "The Knowledge Spillover Theory of Entrepreneurship and Innovation (KSTE+I) Approach and the Advent of AI Technologies: Evidence from the European Regions," IZA Discussion Papers 17206, Institute of Labor Economics (IZA).

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    Keywords

    R&D; entry; barriers; competition;
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