Technological Change in the Modern Corporation and Implications for the Theory of the Firm

Abstract

As was suggested at the beginning of this analysis, its purpose may be regarded as twofold. Its first and most obvious objective was the study and analysis of the factors affecting the allocation of resources to research and development activity in the large modern corporation, this being the concern of Chapter 7. The regression analysis of this chapter was conducted in an attempt to establish possible determinants of R & D activity; the results were consistent with a number of the hypothesised relationships. In particular, two results are worth emphasising for their implications for policy purposes. Firstly, no evidence was found to support the conventional wisdom that federal funding of R & D merely substitutes company funding; rather the regression analysis was consistent with the hypothesis that federal funds augment rather than replace company funds for R & D, ceteris paribus. Secondly, contrary to the initial expectation that technological opportunity (P _j ) and propensity to undertake basic research (N _ij ) are positively related, a statistically significant relationship between P _j and N _ij was found suggesting the opposite relationship (after the effects of industrial growth and size of research establishment had been separated out).