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Journal of Productivity Analysis

, Volume 37, Issue 2, pp 125–140 | Cite as

Corporate R&D and firm efficiency: evidence from Europe’s top R&D investors

  • Subal C. KumbhakarEmail author
  • Raquel Ortega-Argilés
  • Lesley Potters
  • Marco Vivarelli
  • Peter Voigt
Article

Abstract

The main objective of this study is to investigate the impact of corporate research and development (R&D) activities on firm performance, measured by labour productivity. To this end, the stochastic frontier technique is used on a unique unbalanced longitudinal dataset comprising top European R&D investors over the period 2000–2005. In this framework, this study quantifies technical inefficiency of individual firms. From a policy perspective, the results of this study suggest that if the aim is to leverage firms’ productivity, the emphasis should be put on supporting corporate R&D in high-tech sectors and, to some extent, in medium-tech sectors. On the other hand, corporate R&D in the low-tech sector is found to have a minor effect in explaining productivity. Instead, encouraging investment in fixed assets appears important for the productivity of low-tech industries. Hence, the allocation of support for corporate R&D seems to be as important as its overall increase and an ‘erga omnes’ approach across all sectors appears inappropriate. However, with regard to technical efficiency, R&D intensity is found to be a pivotal factor in explaining firm efficiency and this turns out to be true for all industries.

Keywords

Corporate R&D Productivity Technical efficiency Stochastic frontier analysis 

JEL classification

L2 O3 

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Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  • Subal C. Kumbhakar
    • 1
    Email author
  • Raquel Ortega-Argilés
    • 2
  • Lesley Potters
    • 3
  • Marco Vivarelli
    • 4
    • 5
    • 6
  • Peter Voigt
    • 7
  1. 1.State University of New YorkBinghamtonUSA
  2. 2.IN+ Centre for Innovation, Technology and Policy ResearchInstituto Superior TécnicoLisbonPortugal
  3. 3.Utrecht School of EconomicsUtrechtThe Netherlands
  4. 4.Università Cattolica del Sacro CuoreMilanItaly
  5. 5.SPRU, University of SussexBrightonUK
  6. 6.IZABonnGermany
  7. 7.European Commission, Joint Research CentreInstitute for Prospective Technological StudiesSevilleSpain

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