Abstract
AbstractResearch and Development (R&D) indicators are used to facilitate international comparisons and as targets for research and innovation policy. An example of such an indicator is R&D intensity. The decomposition of the aggregate corporate R&D intensity is able to explain the differences in R&D intensity between countries by determining whether is the result of firms’ underinvestment in R&D or of the differences across sectors. Despite its importance, the literature of corporate R&D intensity decomposition has been developed only recently. This article reviews for the first time the different methodological frameworks of corporate R&D intensity decomposition and how they are used in practice, shedding light on why sometimes empirical results seem to be contradictory. It inspects how the use of different data sources and analytical methods affect R&D intensity decomposition results, and what the analytical and policy implications are. The article also provides methodological and analytical guidance to analysts and policymakers.
Highlights
Research and development (R&D) expenditures and intensity indicators have long been regarded as central for growth, productivity and competitiveness by both policy makers and innovation analysts (Schumpeter, 1949; Griliches, 1979; Romer, 1990; Coccia, 2008; Ugur et al, 2016).R&D intensity targets are one of the main objectives of the EU’s research and innovation policy agenda
To provide an example of the impact that the use of different data sources has on the final decomposition result, we report in Figure 2 the work by Hernandez et al (2013), who investigated the EU–US R&D gap by analysing ANBERD10 statistics and EU R&D Scoreboard data
Recommendations on data and methodology for analysts and policymakers The arguments presented in the previous sections regarding the main reasons for discrepant results on the decomposition of business R&D intensity found in the literature can be grouped as follows: (i) differing accounting practices and natures of data sources used; (ii) R&D intensity decomposition methodology, including possible adjustments for countries’ industrial structures and the definition of R&D intensity used; and (iii) heterogeneity of countries and business structures and the timing of the economic cycles analysed
Summary
Research and development (R&D) expenditures and intensity indicators have long been regarded as central for growth, productivity and competitiveness by both policy makers and innovation analysts (Schumpeter, 1949; Griliches, 1979; Romer, 1990; Coccia, 2008; Ugur et al, 2016). As regards the firm-level dimension, the theoretical framework of determinants of corporate R&D intensity indicates that the total corporate R&D intensity of a given economy (country) depends on both the structural (sector) composition effect and intrinsic effect (Pakes and Schankerman, 1984; Erken, 2008; Gorg and Greenaway, 2003; Mathieu and van Pottelsberghe de la Potterie, 2010; Vivarelli, 2013; Becker and Hall, 2013). They argue that the structural factors affecting an economy can be exogenous or endogenous. The two subsections review the empirical findings concerning the causes of the EU corporate R&D intensity gap by intrinsic (firm-level) and sectoral effects
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