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The Role of Time in Assessing the Economic Effects of R&D

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  • Mario Kafouros
  • Chengqi Wang

Abstract

This study investigates the impacts of R&D on firm performance. It extends previous research by constructing alternative stocks of R&D-Capital that take into account that time plays an important role in assessing the pay-off of industrial research. The results show that even when we employed R&D-Capitals that placed more emphasis on the industrial research that had been undertaken 7 years ago, the effects of R&D were very (statistically) significant and relatively high, thereby suggesting that the life of R&D (on average) tends to be long. The results however, vary across organizations depending on both firm size and the technological opportunities that a company faces. It appears that the depreciation rate of R&D investments is higher in the case of technologically sophisticated firms. In contrast, strategic investments in industrial research generate a relatively constant effect on the performance of other firms, supporting the notion that the corresponding returns for such firms decay slowly.

Suggested Citation

  • Mario Kafouros & Chengqi Wang, 2008. "The Role of Time in Assessing the Economic Effects of R&D," Industry and Innovation, Taylor & Francis Journals, vol. 15(3), pages 233-251.
    • Handle: RePEc:taf:indinn:v:15:y:2008:i:3:p:233-251
    DOI: 10.1080/13662710802041638
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    References listed on IDEAS

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    1. Zvi Griliches, 1998. "Productivity and R&D at the Firm Level," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 100-133, National Bureau of Economic Research, Inc.
    2. Zvi Griliches, 1984. "R&D, Patents, and Productivity," NBER Books, National Bureau of Economic Research, Inc, number gril84-1.
    3. Jiann-Chyuan Wang & Kuen-Hung Tsai, 2003. "Productivity Growth and R&D Expenditure in Taiwan's Manufacturing Firms," NBER Working Papers 9724, National Bureau of Economic Research, Inc.
    4. Ariel Pakes & Mark Schankerman, 1984. "The Rate of Obsolescence of Patents, Research Gestation Lags, and the Private Rate of Return to Research Resources," NBER Chapters, in: R&D, Patents, and Productivity, pages 73-88, National Bureau of Economic Research, Inc.
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    Cited by:

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    2. Thomas Brenner, 2014. "Science, Innovation and National Growth," Working Papers on Innovation and Space 2014-03, Philipps University Marburg, Department of Geography.
    3. Sixtus Cyprian Onyekwere, 2019. "The Impact of Research and Development (R&D) Expenditure on Productivity Growth: A Panel Data Evidence from the UK Manufacturing Sector," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 6(2), pages 205-215.
    4. Mohamad Yunus, Norhanishah & Said, Rusmawati & Law, Siong Hook, 2014. "Do Cost of Training, Education Level and R&D Investment Matter towards Influencing Labour Productivity?," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 48(1), pages 133-142.
    5. Andrei Coca & Manuela Rozalia Gabor & Irina Olimpia Susanu, 2023. "Do Innovation Metrics Reflect Sustainable Policy Making in Europe? A Comparative Study Case on the Carpathian and Alpine Mountain Regions," Mathematics, MDPI, vol. 11(6), pages 1-31, March.
    6. Alex Coad & Nanditha Mathew & Emanuele Pugliese, 2017. "What's good for the goose ain't good for the gander: cock-eyed counterfactuals and the performance effects of R&D," LEM Papers Series 2017/21, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

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