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| Volume 8, No. 1,
April 2009 |
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Relation of Firm Size to R&D
Productivity |
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| Jinyoung Kim |
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Department of Economics, Korea
University, Korea |
| Sangjoon John Lee |
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College of Business, Alfred
University, U.S.A. |
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Gerald Marschke |
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Department of Economics,
University at Albany—SUNY, U.S.A. |
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NBER and IZA |
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| Abstract |
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Many studies have shown that small
firms generate more patents per R&D dollar than large firms. Does
this mean that small firms are more efficient innovators than large
firms? In this paper we exploit a unique data set to reexamine the
firm size-innovation relationship. Because firm-reported R&D
expenditures may be a biased measure of R&D activities due to
under-reporting by small firms, we use the number of inventors in
the firm’s employ as a measure of R&D inputs. We focus on the
pharmaceutical and semiconductor industries, two industries that are
prolific generators of homogenous innovations. As has been found
elsewhere in the literature, we find that patents per R&D dollar
decline with firm size for both industries. This contrasts with the
relationship between patents per inventor and firm size. The average
number of patents per inventor increases with size in the
semiconductor industry. In the pharmaceutical industry, we find no
relationship between the number of patents produced per inventor and
firm size. |
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Key words:
patents; innovation; labor productivity; research; firm size |
| JEL
classification:
O30; O32; O34; J21; J24 |
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