Differences in the Rates of Return to R&D for European and US Young Leading R&D Firms

29 Pages Posted: 22 Jan 2014

See all articles by Michele Cincera

Michele Cincera

Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management

Reinhilde Veugelers

Catholic University of Leuven (KUL) - Department of Applied Economics; Centre for Economic Policy Research (CEPR)

Date Written: December 2013

Abstract

This paper examines the sources of Europe’s lagging business R&D performance relative to the US, particularly the role played by missing young leading innovators in high technology intensive sectors in Europe. It investigates through econometric analysis differences in the rates of return to R&D of European and US large R&D firms. It finds that, while in the US, young firms succeed in realizing significantly higher rates of return to R&D as compared to their older counterparts, including in high-tech sectors, European firms fail to generate significant rates of return, even if they are yollies and even if they are in high-tech sectors. These findings can at least partly explain why Europe has less R&D intensive young leading innovators in high technology intensive sectors.

Keywords: young firms, rate of return to R&D, EU-US R&D gap

JEL Classification: O33

Suggested Citation

Cincera, Michele and Veugelers, Reinhilde, Differences in the Rates of Return to R&D for European and US Young Leading R&D Firms (December 2013). Available at SSRN: https://ssrn.com/abstract=2382494 or http://dx.doi.org/10.2139/ssrn.2382494

Michele Cincera (Contact Author)

Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management ( email )

42 Av Franklin Roosevelt
1050
Brussels
Belgium
+3226504151 (Phone)
+3226504305 (Fax)

Reinhilde Veugelers

Catholic University of Leuven (KUL) - Department of Applied Economics ( email )

Leuven, B-3000
Belgium
+32 16 32 6908 (Phone)
+32 16 32 6732 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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