The determinants of R&D persistence in SMEs

Market Power and Duration of R&D Investment in a Panel of Italian Firms

“…This paper aims to further the analysis on the duration of R&D investment at the firm level. The contribution of this study is threefold: first, we extend Máñez et al [2014], Triguero et al [2014] analysis for Spain to the Italian case: we use a panel of manufacturing and service companies, thus enlarging the view of R&D duration within the European countries. Secondly, from a methodological point of view, we employ both discrete-and continuous-time duration models, in order to test the Proportional Hazards (PH) assumption, i.e.…”

“…why some firms are continuously engaged in innovation while others show intermittent investment behavior. In order to do so, we exploit a duration model approach, following the work of Máñez et al [2014], Triguero et al [2014], and including a large set of explanatory variables. Two determinants are particularly taken into consideration, the innovation persistence and the market power of companies.…”

“…As we are focusing on innovation persistence, the variable of interest is the duration of firm's innovative effort, or its "innovative spell", as in Máñez et al [2014], Triguero et al [2014]. Such spell is calculated for each firm in our sample as the number of years it reports positive R&D investment.…”

“…In fact, while the overall distribution is quite similar across years, the frequency of round figures rises in 2007. Hence, the mean value of the implied elasticity has been used for such firms, as this operation 12 For innovation studies that employ concentration measures see, among others, [Acs and Audretsch, 1988, Audretsch, 1991, Banbury and Mitchell, 1995, Blundell et al, 1999, Cefis and Ciccarelli, 2005, Duguet and Monjon, 2004, Geroski et al, 2007, Lhuillery, 2014, López-García and Puente, 2006, Máñez et al, 2014; for studies that employ the PCM see [Aghion et al, 2002, Antonelli et al, 2012b, Audretsch, 1995, Greenhalgh and Rogers, 2006; Woerter [2014] uses the number of each firm's principal competitors.…”

“…As in Máñez et al [2014], we use the semi-parametric Cox model as starting point for our analysis, since it is quite flexible and does not require any assumption about the functional form of the hazard. Each i-th firm faces a hazard function which is common to all firms (the "baseline" hazard, λ 0 ) and is then modified by the set of explanatory variables x i .…”