| By: |
Boris Lokshin;
Rene Belderbos;
Martin Carree |
| Abstract: |
We examine the impact of internal and external R&D on labor productivity in a
6-year panel of 304 innovating firms. We apply a dynamic linear panel data
model that allows for decreasing returns to scale in internal and external R&D
with a non-linear approximation of changes in the knowledge stock. We find
complementarity between internal and external R&D, with a positive impact of
external R&D only evident in case of sufficient internal R&D. The findings
confirm the role of internal R&D in enhancing absorptive capacity and hence
the effective utilization of external knowledge. These results suggest that
empirical studies examining complementarities between continuously measured
practices should adopt more general non-linear specifications to allow for
correct inferences. |
| Keywords: |
R&D, Innovation, Complementarity, Dynamic panel data, Productivity |
| JEL: |
O32 O33 D24 |
| Date: |
2006–05 |
| URL: |
http://d.repec.org/n?u=RePEc:hst:hstdps:d06-163&r=tid |