nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2013‒08‒10
two papers chosen by
Rui Baptista
Technical University of Lisbon

  1. The production function of top R&D investors: Accounting for size and sector heterogeneity with quantile estimations By Antonio Vezzani; Sandro Montresor
  2. Is money all? Financing versus knowledge and demand constraints to innovation By Gabriele Pellegrino; Mark J. Maria Savona

  1. By: Antonio Vezzani (JRC-IPTS); Sandro Montresor (JRC-IPTS)
    Abstract: The paper investigates how top R&D investors differ in the production impact of their inputs and in their rate of technical change. We use the EU Industrial R&D Investment Scoreboard and perform a quantile estimation of an augmented Cobb-Douglass production function for a panel of more than 1,000 companies, covering the period 2002-2010. The results for the pooled sample are contrasted with those obtained from the estimates for different groups of economic sectors. Returns to scale are bounded by the initial size of the firm, but to an extent that decreases with the technological intensity of the sector. The output return of knowledge capital is the most important, irrespective of firm size, but in high-tech sectors only. Elsewhere, physical capital is the pivotal factor, although with size variations. The investigated firms appear different also in their technical progress: embodied in mid-high and low/mid-low tech sectors, and disembodied in high-tech sectors.
    Keywords: production function, R&D, firm and sector heterogeneity
    JEL: D24 D21 O30
    Date: 2013–07
  2. By: Gabriele Pellegrino (University of Barcelona & IEB); Mark J. Maria Savona (University of Sussex)
    Abstract: The paper adds to the scattered empirical evidence on the role of obstacles to innovation in a three-fold way. First, we correct for the usual sample selection bias by filtering out firms not interested in innovation from ‘potential innovators’. Second, we assess what mostly affects firms’ propensity to realize innovative outputs. Third, we do so in a panel framework by using an unbalanced panel of UK firm for the period 2002 - 2010. We find that demand- and market-related factors are as important as financing conditions in determining firms’ innovation failures. This evidence puts much of the latest hype on finance in perspective.
    Keywords: Barriers to innovation, innovative firms, potential innovators, failed innovators, panel data
    JEL: C23 O31
    Date: 2013

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