Title: Internal and external R&D: complements or substitutes? Evidence from a dynamic panel data model
Authors: Lokshin, B
Belderbos, Rene
Carree, M
Issue Date: 2006
Publisher: K.U.Leuven - Faculty of Economics and Applied Economics
Series Title: DTEW - MSI_0604 pages:1-21
Abstract: We examine the impact of internal and external R&D on labor productivity in a 6-year panel of 304 innovating firms. We apply a dynamic linear panel data model that allows for decreasing returns to scale in internal and external R&D with a non-linear approximation of changes in the knowledge stock. We find complementarity between internal and external R&D, with a positive impact of external R&D only evident in case of sufficient internal R&D. The findings confirm the role of internal R&D in enhancing absorptive capacity and hence the effective utilization of external knowledge. These results suggest that empirical studies examining complementarities between continuously measured practices should adopt more general non-linear specifications to allow for correct inferences.
Publication status: published
KU Leuven publication type: IR
Appears in Collections:Department of Managerial Economics, Strategy and Innovation (MSI), Leuven

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