| Abstract: |
The present paper studies the relationship between R&D investment and firm
productivity growth by explicitly accounting for non-linearities in the
R&D-productivity relationship and inter-sectoral firm heterogeneity. In order
to address these issues, we employ a two step estimation approach, and match
two firm-level panel data sets for the OECD countries, which allows us to
relax both the linearity and homogeneity assumptions of the canonical
Griliches (1979) knowledge capital model. Our results suggest that: (i) R&D
investment increases firm productivity with an average elasticity of 0.15;
(ii) the impact of R&D investment on firm productivity is differential at
different levels of R&D intensity – the productivity elasticity ranges from
-0.02 for low levels of R&D intensity to 0.33 for high levels of R&D
intensity; (iii) the relationship between R&D expenditures and productivity
growth is non-linear, and only after a certain critical mass of R&D is
reached, the productivity growth is significantly positive; (iv) there are
important intersectoral differences with respect to R&D investment and firm
productivity – high-tech sectors’ firms not only invest more in R&D, but also
achieve more in terms of productivity gains connected with research activities. |