Small is big in ICT: The impact of R&D on productivity

We examine the contribution of R&D to firm productivity in a large panel of European firms and study its variation with the age, size, and sub-sector of firms. We find that R&D capital in ICT firms has a larger effect on revenue when compared to non-ICT firms. At the firm level, our results...

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Bibliographic Details
Published in:Telecommunications policy 2020-02, Vol.44 (1), p.101833, Article 101833
Main Authors: Koutroumpis, Pantelis, Leiponen, Aija, Thomas, Llewellyn D.W.
Format: Article
Language:English
Subjects:
Communications technology
Companies
Firm age
Firm size
ICT
Information technology
Niche markets
Productivity
Public policy
R&D
Research & development
Technological opportunity
Telecommunications policy
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Summary:We examine the contribution of R&D to firm productivity in a large panel of European firms and study its variation with the age, size, and sub-sector of firms. We find that R&D capital in ICT firms has a larger effect on revenue when compared to non-ICT firms. At the firm level, our results suggest that, surprisingly, smaller and older ICT firms benefit the most from R&D. Small but mature ICT firms are likely to dominate market niches, and small size may enable them to be flexible and adaptable which helps them respond to technological opportunities to develop innovative products and services. This has important implications for public policy based upon firm age. •R&D capital in ICT firms has a larger effect on revenue when compared to non-ICT firms.•Smaller and older ICT firms benefit the most from R&D capital.•Small but mature ICT firms are likely to dominate market niches.
ISSN:0308-5961
1879-3258
DOI:10.1016/j.telpol.2019.101833