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Inverted-U relationship between R&D intensity and survival: evidence on scale and complementarity effects in UK data

Inverted-U relationship between R&D intensity and survival: evidence on scale and complementarity effects in UK data

Ugur, Mehmet ORCID: 0000-0003-3891-3641, Trushin, Eshref and Solomon, Edna (2016) Inverted-U relationship between R&D intensity and survival: evidence on scale and complementarity effects in UK data. Research Policy, 45 (7). pp. 1474-1492. ISSN 0048-7333 (doi:10.1016/j.respol.2016.04.007)

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Abstract

Existing evidence on the relationship between R&D intensity and firm survival is varied and often conflicting. We argue that this may be due to overlooking R&D scale effects and complementarity between R&D intensity and market concentration. Drawing on Schumpeterian models of competition and innovation, we address these issues by developing a formal model of firm survival and using a panel dataset of 37,930 of R&D-active UK firms over 1998–2012. We report the following findings: (i) the relationship between R&D intensity and firm survival follows an inverted-U pattern that reflects diminishing scale effects; (ii) R&D intensity and market concentration are complements in that R&D-active firms have longer survival time if they are in more concentrated industries; and (iii) creative destruction as proxied by median R&D intensity in the industry and the premium on business lending have negative effects on firm survival. Other findings concerning age, size, productivity, relative growth, Pavitt technology classes and the macroeconomic environment are in line with the existing literature. The results are strongly or moderately robust to different samples, stepwise estimations, and controls for frailty and left truncation

Item Type: Article
Additional Information: © 2016 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/). Refers to Ugur et al. (2016) “A firm-level dataset for analyzing entry, exit, employment and R&D expenditures in the UK: 1997–2012” Data in Brief, Vol. 8, September 2016, Pages 153–157 also available via University of Greenwich repository.
Uncontrolled Keywords: R&D; Innovation; Firm dynamics; Survival analysis;
Subjects: H Social Sciences > HA Statistics
H Social Sciences > HB Economic Theory
Faculty / Department / Research Group: Faculty of Business
Faculty of Business > Department of International Business & Economics
Faculty of Business > Greenwich Political Economy Research Centre (GPERC)
Last Modified: 22 Feb 2018 12:14
Selected for GREAT 2016: None
Selected for GREAT 2017: GREAT c
Selected for GREAT 2018: None
URI: http://gala.gre.ac.uk/id/eprint/15510

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