Firm growth and R&D expenditure

By Alex Coad, Rekha Rao. 2010

276 citations recorded by the source corpus.

We apply a panel vector autoregression model to a firm-level longitudinal database to observe the co-evolution of sales growth, employment growth, profits growth and the growth of research and development (R&D) expenditure. Contrary to expectations, profit growth seems to have little detectable association with subsequent R&D investment. Instead, firms appear to increase their total R&D expenditure following growth in sales and employment. In a sense, firms behave ‘as if’ they aim for a roughly constant ratio of R&D to employment (or sales). We observe heterogeneous effects for growing or shrinking firms, however, suggesting that firms are less willing to reduce their R&D levels following a negative growth shock than they are willing to increase R&D after a positive shock.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/5768f77afe04a61f8d6cff10a77e3786cd4c6b9d

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In Economics and Econometrics

Citations in the corpus

High-growth firms and technological knowledge: do gazelles follow exploration or exploitation strategies? (2014, methodology): “When other dependent variables are taken into account, like the R&D (see Coad and Rao, 2010), the implementation of quantile regressions assign firms to different classes according the growth rate of R&D expenditure, and not on the basis of firms’ growth.”
High-growth firms and productivity: evidence from the United Kingdom (2015, background): “, 1996; Huynh and Petrunia, 2010), R&D expenditure (Coad and Rao, 2010) and innovative activity (Mason et al.”
R&D drivers and age: : Are young firms different? (2014, background): “3 For a recent paper focused on the autoregressive nature of R&D investments, see Coad and Rao (2010).”
High-growth firms and innovation: an empirical analysis for Spanish firms (2014, methodology): “Hence, quantile estimations provide more details about the sensitivity of the determinants of growth distribution (see also the previous analysis by Coad and Rao (2010)).”
‘Better late than never’: the interplay between green technology and age for firm growth (2017, methodology): “To address this research question, we rely on a novel methodological approach: a quantile regression analysis (e.g. Coad and Rao 2008; Coad and Rao 2010; Coad et al. 2013) performed by using a fixed effects estimation technique (Canay 2011).”
Like milk or wine: Does firm performance improve with age? (2013, methodology): “20 See Coad (2010) for an analysis of French data, Coad and Rao (2010) for US data, and Coad et al. (2008) for an analysis of Italian data.”
Innovation and firm growth: Does firm age play a role? (2016, unknown): “In others words, firms that enjoy growth (or even firms that anticipate that they will grow) may be able to commit resources to subsequent innovation activity (Coad and Rao, 2010).”
Environmental regulations, induced R&D, and productivity: Evidence from Taiwan's manufacturing industries (2012, unknown): “Based on the structure–conduct–performance (SCP) paradigm and referring to previous studies (e.g., Siddharthana and Agarwal, 1992; Grabowski and Vernon, 2000; Coad and Rao, 2010), the empirical model is specified as following the log–log specification and the estimated coefficient can be interpreted”
Causal Inference by Independent Component Analysis: Theory and Applications* (2013, unknown): “These results are essentially identical to those obtained by Coad and Rao (2010).”