NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Bounding the Effects of R&D: An Investigation Using Matched Establishment-Firm Data

James D. Adams, Adam B. Jaffe

NBER Working Paper No. 5544
Issued in April 1996
NBER Program(s):   PR

Studies of firm-level data have shown that a firm's R&D and the R&D of other firms increase conventional factor productivity. We investigate these phenomena further by examining the relationship between plant-level productivity and firm-level R&D. We find that (1) the productivity-enhancing effects of parent firm R&D are diminished by geographic distance from the research lab and `technological' distance between the product-field focus of the R&D and the plants; (2) productivity appears to depend on the intensity of parent firm R&D (R&D per plant), not on the total amount; and (3) spillovers of research effects from technologically related firms are significant but also depend on R&D intensity rather than total industry R&D. These results suggest that, despite the externalities created by spillovers of R&D, the `dilution' of R&D across multiple target plants reduces its potency sufficiently that spillovers may not be a source of industry-wide or economy-wide increasing returns.

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Document Object Identifier (DOI): 10.3386/w5544

Published: in the Rand Journal of Economics vol.27,no.4, (winter,1996), pp.700-721.

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