Does R&D protect SMEs from the hardness of the cycle? Evidence from Spanish SMEs (1990-2009)
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- Añón-Higón, D., Manjón-Antolin, M., Mañez, J.A. et al. Int Entrep Manag J (2015) 11: 361. doi:10.1007/s11365-014-0329-0
This paper analyses whether undertaking R&D activities allows SMEs to attenuate the negative impact of recessions on productivity. In contrast to other studies we use a firm level indicator of the cycle based on firms’ own perceptions, while total factor productivity is obtained using a control function methodology in which we recognise the potential role that R&D experience might have in shaping future firms’ productivity. The analysis is performed using a representative sample of Spanish SMEs for the period 1990–2009. Results show both that R&D activities render positive productivity returns, and that performing R&D helps to alleviate the negative effects of downturns on productivity. Additionally, R&D seems to have a countercyclical effect upon SME’s productivity over the business cycle, as we find that SMEs R&D productivity premium in recessions doubles that of expansions.