Bounding the Effects of R & D: An Investigation Using Matched Establishment-Firm Data

Abstract

We find that the effects of parent firm R & D on plant-level productivity are diminished by both the geographic and technological distance between the research lab and the plants, that productivity appears to depend on R & D per plant rather than on the total amount, and that spillovers from technologically related firms are significant but also depend on R & D intensity rather than on total industry R & D. These results suggest that the "dilution" of R & D across multiple target plants reduces its potency sufficiently that spillovers may not be a source of industrywide or economywide increasing returns.

JEL Classification: L1, O3