Abhatoo - Centre Nationale de Documentation

The main objective of this study is to investigate the impact of corporate R&D activities on firms’ performance (using productivity as a proxy). To this end, the stochastic frontier technique is applied, basing the analysis on a unique unbalanced longitudinal dataset consisting of 532 top European R&D investors over the period 2000–2005. R&D stocks are considered as pivotal input in order to control for their particular contribution to firmlevel efficiency. Conceptually, the study quantifies the technical inefficiency of a given company and tests empirically whether R&D activities could explain the distance from the efficient boundary of the production possibility set, i.e. the production frontier.

From a policy perspective, the results of this study suggest that – if the aim is to leverage companies’ productivity – emphasis should be put on supporting corporate R&D in hightech sectors and, to some extent, in mediumtech sectors too. By contrast, supporting corporate R&D in the lowtech sector is assumed to have a minor effect. Instead, encouraging investment in fixed assets appears vital for the productivity of lowtech industries. However, with regard to firms’ technical efficiency, R&D matters for all industries (unlike capital intensity). Overall, allocation of support for corporate R&D seems to be as important as any general increase. An ‘ erga omnes’ approach across all sectors appears misleading.