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Title:The role of R&D in new firm growth PDF Logo
Authors:Stam, Erik
Wennberg, Karl
Issue Date:2009
Series/Report no.:Jena economic research papers 2009,004
Abstract:Innovative start-ups are an important driver of economic growth. This article presents empirical evidence on the effects of R&D on new product development, inter-firm alliances and employment growth during the early life course of firms. We use a dataset that contains a sample of new firms that is representative for the whole population of start-ups. This dataset covers the first six years of the life course of firms. R&D reveals to play several roles during the early life course of high tech as well as high growth firms. The effect of initial R&D on high tech firm growth runs via increasing levels of inter-firm alliances in the first post-entry years. R&D efforts enable the exploitation of external knowledge. Initial R&D also stimulates new product development later on in the life course of high tech firms, but this does not seem to affect firm growth. R&D does not affect the growth rate of new low tech firms, which seems to be driven mainly by the growth ambitions of the founding entrepreneur. The results show that R&D matters for a limited but important set of new high tech and high growth firms, which are key in innovation and entrepreneurship policies.
Subjects:New Firms
Innovation
R&D
firm growth
alliances
product development
JEL:D21
L23
L25
L26
M13
Document Type:Working Paper
Appears in Collections:Jena Economic Research Papers, MPI für Ökonomik

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