Bounding the Effects of R&D an Investigation Using Matched Establishment-Firm Data

Studies of firm-level data have shown that a firm's Ramp;D and the Ramp;D of other firms increase conventional factor productivity. We investigate these phenomena further by examining the relationship between plant-level productivity and firm-level Ramp;D. We find that (1) the productivity-enhancing effects of parent firm Ramp;D are diminished by geographic distance from the research lab and quot;technologicalquot; distance between the product-field focus of the Ramp;D and the plants; (2) productivity appears to depend on the intensity of parent firm Ramp;D (Ramp;D per plant), not on the total amount; and (3) spillovers of research effects from technologically related firms are significant but also depend on Ramp;D intensity rather than total industry Ramp;D. These results suggest that, despite the externalities created by spillovers of Ramp;D, the quot;dilutionquot; of Ramp;D across multiple target plants reduces its potency sufficiently that spillovers may not be a source of industry-wide or economy-wide increasing returns