Persistence Of R&D Intensities In The World'S Top Investors In R&D

There is extensive empirical evidence of a within-sector heterogeneity in terms of firms' R&D intensity (share of expenditures on sales) which, moreover, does not converge to a common level over time. Using a balanced panel of the world's top R&D investors, we first investigate whether there is a different degree of time persistence along the R&D intensity distribution. Secondly, we analyse whether the persistence in and the transition to different levels are heterogeneous between four R&D-intensive sectors. As a general result, we find that companies starting with low R&D intensities are more likely to move towards the sector medium levels than those exerting a high innovative effort, which persist in the right tail of the distribution. With the exception of the Pharmaceutical sector, company size affects negatively (positively) the persistence and the entry rate into the top (bottom) 20% of the R&D intensity distribution. Differences across sectors emerge with respect to the impact of other company characteristics (profitability, capital investment, and location).