An Empirical Test of the Asymmetric Models on Innovative Activity: Who Invests More into R&D the Incumbent or the Challenger?

By Dirk Czarnitzki, Kornelius Kraft. 2004

110 citations recorded by the source corpus.

The theoretical discussion concerning the question whether the incumbent or the (potential) entrant invests more into R&D has attracted considerable interest. This paper reports the results of an empirical study on this question using data of about 3500 German firms over the years 1992 to 1995. The survey explicitly asks the firms for their motives to undertake innovative activity. It is thus possible to take account of intended, not just completed, market entry. It turns out that the challenger invests more into R&D in order to enter a new market than the incumbent. Thus, the patent racing model by Reinganum and others seems to characterize innovative activity more accurately than the competing auction model of Gilbert and Newbery. We use a heteroscedastic tobit as well as a tobit model with selectivity in order to deal with the econometric problems of double censoring.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/0c10a250086243a7e94b7b7534559b33c19aeb79

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In Economics and Econometrics

Citations in the corpus

Evaluating the Impact of R&D Tax Credits on Innovation: A Microeconometric Study on Canadian Firms (2011, unknown): “Czarnitzki and Kraft (2004) show that firms challenging new markets invest more in R&D than”
Patent Thickets, Licensing and Innovative Performance (2010, methodology): “Czarnitzki and Kraft (2005) study licensing expenditures by incumbents and entrants using the same innovation survey data we consider in the present paper.”