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Jose Plehn-Dujowich
''Innovation, Firm Size, and R&D Search''
( 2007, Vol. 12 No.18 )
We present evidence that small firms perform two to four times more innovations per dollar of R&D than large firms. We propose a search theory of R&D that accounts for the evidence. A firm incurs R&D expenses until it has discovered a level of R&D productivity that is sufficiently great to warrant stopping the search. We show that because the large number of R&D projects run by a large firm becomes a substitute for enhanced R&D productivity, the average R&D productivity of a firm is decreasing in firm size.
JEL: L2 - Firm Objectives, Organization, and Behavior: General
O3 - Technological Change; Research and Development: General
Manuscript Received : Jun 22 2007 Manuscript Accepted : Aug 31 2007

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