Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/285360 
Year of Publication: 
2024
Series/Report no.: 
ifh Working Paper No. 43/2024
Publisher: 
Volkswirtschaftliches Institut für Mittelstand und Handwerk an der Universität Göttingen (ifh), Göttingen
Abstract: 
The literature has established that young firms engaged in R&D exhibit a pronounced asymmetry in their economic performance, with high premia at the upper end of the conditional growth distribution. We argue that this binary view - i.e., R&D-oriented firms versus all others - is somewhat limited. In particular, non-R&D innovation activity should be treated as an important category in its own right, and that its sui generis mode of learning is reflected in a distinct growth pattern. We examine data from the German IAB/ZEW Start-up Panel. Our evidence suggests that young non-R&D innovators also exhibit asymmetric and improved economic performance relative to non-innovators, although less so than R&D firms. Our results also suggest that firms engaged in non-R&D innovation grow in a less risky and costly way than R&D innovators, and that a young firm's decision whether to engage in R&D for the purpose of innovation and growth can therefore usefully be understood as being driven by a specific risk-return trade-off.
Subjects: 
Firm growth
R&D
non-R&D innovation
Modes of innovation
JEL: 
D21
L11
L25
L26
O31
Document Type: 
Working Paper

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