The return to the technological frontier: The conditional effect of R&D on plant productivity in Finnish manufacturing

: Eero Lehto, Petri Böckerman, Janne Huovari

Publisher: Wiley

: 2011

: Papers in Regional Science

: PAPERS IN REGIONAL SCIENCE

: PAP REG SCI

: 90

: 1

: 91

: 110

: 20

: 1056-8190

DOI: https://doi.org/10.1111/j.1435-5957.2010.00318.x

The paper asks whether R&D's productivity impacts are conditional on the gap of a plant's productivity from the industry's technological frontier. The results show that a plant's own R&D and a parent firm's R&D have a positive productivity impact. The impact of a plant's own R&D decreases as the gap from the industry's technological frontier grows. Furthermore, the productivity impact of other firms' (geographic) distance-weighted R&D is, on average, positive. However, this impact increases as the gap from the technological frontier grows.