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Doing R&D in a Closed or Open Mode: Dynamics and Impacts on Productivity

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  • Julio Rosa
  • Pierre Mohnen

Abstract

On the one hand, firms prefer to perform R&D in an open mode (letting R&D be performed extramurally or even selling their R&D services) to benefit from knowledge spillovers and complementarities between internal and external R&D. On the other hand, they may also like to perform R&D in a closed mode (funding and executing their R&D intramurally) to minimize outgoing externalities. We examine the dynamic process by which firms change the way of doing R&D and how these strategic choices of doing R&D affect their productivity growth. This study is based on the Statistics Canada Research and Development in Canadian Industry survey (RDCI), which collects data on R&D performed in the business sector in Canada. The paper is based on data for the period 1997 to 2006. The panel dimension of the data allows to control for unobserved characteristics of R&D performers by estimating a multinomial Logit model with unobserved heterogeneities using maximum simulated likelihood (MSL) method. Les firmes sont tiraillées entre deux façons de faire de la R-D. D'un côté, elles préfèrent faire la R-D de manière ouverte (en faisant faire de la R-D extramuros ou même en vendant des services de R-D) afin de bénéficier d'externalités de connaissance et de complémentarités entre la R-D interne et la R-D externe. D'un autre côté, elles préconisent de faire la R-D en mode fermé (en faisant de la recherche intramuros et en se finançant sur base de fonds propres ou de subventions) afin de minimiser les fuites de connaissance. Dans cette étude, nous examinons la dynamique des choix quant à la façon de faire de la recherche et l'effet de ces choix sur les rendements de celle-ci. Nous nous basons sur les données de l'enquête de Statistique Canada sur la recherche et développement dans l'industrie canadienne (RDIC) pour la période 1997-2006. La dimension panel de la base de données nous permet de contrôler pour l'hétérogénéité individuelle inobservée dans l'estimation d'un modèle Logit multinomial dynamique à partir de la méthode du maximum de vraisemblance simulé.

Suggested Citation

  • Julio Rosa & Pierre Mohnen, 2013. "Doing R&D in a Closed or Open Mode: Dynamics and Impacts on Productivity," CIRANO Working Papers 2013s-42, CIRANO.
    • Handle: RePEc:cir:cirwor:2013s-42
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    2. Santosh K. Sahu & K. Narayanan, 2015. "Technology Import, R and D Spillover and Export: A Study of Automobile Sector in India," Working Papers 2015-098, Madras School of Economics,Chennai,India.

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    More about this item

    Keywords

    R&D; State Dependence; Dynamic Multinomial Logit; Panel-data; Maximum Simulated Likelihood; Open Innovation; persistance; modèle Logit multinomial dynamique; données panel; maximum de vraisemblance simulé; innovation ouverte;
    All these keywords.

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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