EU-US Differences in the Size of R&D Intensive Firms: Do they explain the overall R&D Intensity Gap?

The average firm size of the top R&D investors among US-based companies is smaller than that of the EU-based firms. Does this help to explain why the US has a greater R&D intensity, or is the higher firm size in the EU, just as its lower R&D intensity, determined by the sectors in which the top R&D investors are operating? Using data on the top-R&D investors from the 2006 EU Industrial R&D Investment Scoreboard, the size differential between R&D performers in the EU and US is more closely examined. A first observation is that, despite great differences between sectors, the overall distribution of companies' R&D investments in both economies is remarkably similar, as opposed to the distribution of the R&D/sales ratios of the same two sets of companies. The notion that size plays a role, independent of the sectoral composition of R&D, is then confirmed by regression analysis. In the US as well as in the EU, smaller sized Scoreboard companies tend to spend a larger proportion of their income from sales on R&D. JEL-classification: L11, 030 Keywords: R&D intensity, firm size, panel data

ORTEGA ARGILES Raquel;  BRANDSMA Andries; 

2008-11-07

Friedrich Schiller University Jena and Max Planck Institute of Economics

JRC46644

1864-7057,   

http://zs.thulb.uni-jena.de/receive/jportal_jparticle_00102475,    https://publications.jrc.ec.europa.eu/repository/handle/JRC46644,