Publication: Related diversification and R&D intensity dynamics
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2010-04
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Elsevier
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Abstract
Using longitudinal data of Spanish manufacturing companies, we study the dynamic, bidirectional
relationship between firm research and development (R&D) intensity and corporate diversification in
an organic growth setting. Our empirical approach accounts for the different sources of endogeneity.
Although we find a positive linear effect of R&D intensity on related diversification, the effect of related
diversification on R&D intensity assumes the form of an inverted U. Thus, the effect of related diversification
on R&D intensity is positive, but marginally decreases for moderate levels of related diversification.
Such an effect can become negative, however, for high levels of related diversification. Additionally, as a
consequence of dynamics, the effects after one year are substantially lower than the overall effects that
occur over several years.
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Keywords
Diversification, R&D intensity, Dynamics, Organic growth, Endogeneity, Panel data
Bibliographic citation
Research Policy, (Abril 2010), v. 39, n. 4, pp. 537-548