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Firm growth and R&D: Evidence from the Portuguese manufacturing industry

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Abstract

This work studies the effects of R&D activities and investment, both physical and R&D, on the growth of firms by considering a dynamic firm growth model with serial correlation. The main hypotheses maintain that firms with a strong commitment to R&D have a higher growth rate, and investment has a positive effect on firm growth. We investigate such relations with reference to an unbalanced panel data set of Portuguese manufacturing firms over the period of 1990 to 2001. We find that a systematic tendency for smaller firms to grow more quickly is the main reason why firm growth is not entirely stochastic.

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Notes

  1. See for example Singh and Whittington (1975), Chesher (1979), Kumar (1985), Wagner (1992), Dunne and Hughes (1994), Tschoegl (1996), Hart and Oulton (1998), Almus and Nerlinger (2000), Vander Vennet (2001), Goddard et al (2002) and Audretsch et al. (2004).

  2. Although a more efficient two-step GMM estimator is available, the asymptotic standard errors for the two-step estimator can be an unreliable guide for inference in finite samples. The system GMM estimates that we report are computed using DPD for OX (see Doornik, Arellano, and Bond, 2002).

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Acknowledgements

The authors gratefully acknowledge the financial support of “Fundação para a Ciência e Tecnologia” (FCT – Portugal), through the research project reference n°: FCOMP-01-0124-FEDER-009960 - reference FCT n° PTDC/EGE-ECO/108586/2008.

We also gratefully acknowledge the valuable comments of the participants of 4th European Meeting on Applied Evolutionary Economics (Utrecht, 2005), the editor and two anonymous reviewers for their help in improving this paper.

All errors and omissions remain our own responsibility.

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Authors and Affiliations

  1. ESTG, CIGS, Polytechnic Institute of Leiria, Leiria, Portugal

    Blandina Oliveira

  2. CEFAGE, University of Évora, Évora, Portugal

    Blandina Oliveira

  3. Faculty of Economics and GEMF, University of Coimbra, Coimbra, Portugal

    Adelino Fortunato

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  1. Blandina Oliveira
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  2. Adelino Fortunato
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Correspondence to Blandina Oliveira.

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Oliveira, B., Fortunato, A. Firm growth and R&D: Evidence from the Portuguese manufacturing industry. J Evol Econ 27, 613–627 (2017). https://doi.org/10.1007/s00191-016-0487-z

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