Bilateral R&D Productivity and Supply Chain Networks

31 Pages Posted: 24 Feb 2020

See all articles by Yuqi Peng

Yuqi Peng

University of South Carolina - Darla Moore School of Business

Yan Dong

University of South Carolina - Darla Moore School of Business

Ahmet Colak

Clemson University, College of Business

Sriram Venkataraman

University of South Carolina

Date Written: January 27, 2020

Abstract

We study research and development productivity (RDP) transmission between 4,123 global firms across three supply chain tiers. Collecting 153,090 yearly supply chain dyad partnerships from Bloomberg, we construct a two-sided econometric model of supply chain R&D. In our empirical specification, the dependent variable measures return on R&D, and the independent variables measure supply chain partner and network effects. In our sample data, we find that a 1% R&D productivity improvement of (i) an upstream partner can increase a downstream agent’s R&D productivity by 0.14%, and (ii) a downstream partner can increase an upstream agent’s R&D productivity by 0.28%. Our findings show that having R&D-productive partners plays a significant role in transforming an agent’s R&D into revenues. Similarly, we estimate a network’s average R&D productivity elasticity on an agent as 0.23%. We further find that R&D productivity spreads more within smaller, integrated, domestic, and intra-industry networks. In our two-stage estimation, we address supply chain network endogeneity resulting from entanglement, simultaneity, and partner selection. Our findings provide operational and financial insights for R&D practitioners.

Keywords: Bilateral model, R&D productivity, supply chain innovation, network formation

Suggested Citation

Peng, Yuqi and Dong, Yan and Colak, Ahmet and Venkataraman, Sriram, Bilateral R&D Productivity and Supply Chain Networks (January 27, 2020). Available at SSRN: https://ssrn.com/abstract=3526406 or http://dx.doi.org/10.2139/ssrn.3526406

Yuqi Peng (Contact Author)

University of South Carolina - Darla Moore School of Business ( email )

1014 Greene St
Columbia, SC 29208
United States

Yan Dong

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States

Ahmet Colak

Clemson University, College of Business ( email )

101 Sirrine Hall
Clemson, SC 29634
United States

Sriram Venkataraman

University of South Carolina ( email )

701 Main Street
Columbia, SC 29208
United States

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