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Effect of R&D on firms? growth: discrepancy between sales growth and employment expansion

Author

Listed:
  • Donghyuk Choi

    (KISTEP)

  • Joseph Kang

    (KISTEP)

  • Chiyong Kim

    (KISTEP)

Abstract

In this paper, we analyze the effect of firms? R&D investment on sales growth and employment expansion. We attempt to shed light on the R&D investment effect by comparing the difference of R&D influence on these two growth dimensions. The estimation results of the panel fixed-effect model show that the previous year?s R&D investment has a significant and positive association with the current year?s sales growth but does not result in significant employment expansion. We also conduct a two-digit industry-level analysis based on the Korean Standard Industrial Classification (KSIC), using a quantile regression model, to examine how the discrepancy between sales growth and employment expansion differs between industries. Among various manufacturing industries, high-tech industries such as electronics are characterized by large discrepancies. Based on the estimation results, we discuss industrial policies for sustainable growth when a nation such as South Korea follows a high-growth strategy by increasing the rate of R&D investment.

Suggested Citation

  • Donghyuk Choi & Joseph Kang & Chiyong Kim, 2014. "Effect of R&D on firms? growth: discrepancy between sales growth and employment expansion," Proceedings of Economics and Finance Conferences 0401582, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iefpro:0401582
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    References listed on IDEAS

    as
    1. Coad, Alex & Rao, Rekha, 2008. "Innovation and firm growth in high-tech sectors: A quantile regression approach," Research Policy, Elsevier, vol. 37(4), pages 633-648, May.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    R&D; firm growth; sustainable growth;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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