Working Paper: NBER ID: w13060
Authors: Nicholas Bloom; Mark Schankerman; John Van Reenen
Abstract: Support for R&D subsidies relies on empirical evidence that R&D "spills over" between firms. But firm performance is affected by two countervailing R&D spillovers: positive effects from technology spillovers and negative business stealing effects from R&D by product market rivals. We develop a general framework showing that technology and product market spillovers have testable implications for a range of performance indicators, and then exploit these using distinct measures of a firm's position in technology space and product market space. Using panel data on U.S. firms between 1980 and 2001 we show that both technology and product market spillovers operate, but technology spillovers quantitatively dominate. The spillover effects are also present when we analyze three high tech sectors in finer detail. Using the model we evaluate the net spillovers from three alternative R&D subsidy policies.
Keywords: technology spillovers; product market rivalry; R&D subsidies; firm performance
JEL Codes: F23; L1; O31; O32; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Technology spillovers (O39) | Firm performance (L25) |
| Product market rivalry (L13) | Firm performance (L25) |
| Technology spillovers (O39) | Market value (D46) |
| Product market rivalry (L13) | Market value (D46) |
| Technology spillovers + Product market rivalry (O36) | Firm performance (L25) |
| R&D by market rivals (O36) | Firm's own R&D (O32) |