R&D, International Sourcing, and the Joint Impact on Firm Performance
American Economic Review
vol. 105,
no. 12, December 2015
(pp. 3704-39)
Abstract
This paper studies the impact of an R&D cost shock on R&D investments, imported inputs, and their joint impact on firm performance. We introduce imported inputs into a model of R&D and endogenous productivity, and show that R&D and international sourcing are complementary activities. Exploiting the introduction of an R&D tax credit in Norway in 2002, we find that cheaper R&D stimulated not only R&D investments but also imports of intermediates, quantitatively consistent with the model. An implication of our work is that improved access to imported inputs promotes R&D investments and, ultimately, technological change. (JEL D92, F14, G31, H25, L25, O32, O33)Citation
Bøler, Esther Ann, Andreas Moxnes, and Karen Helene Ulltveit-Moe. 2015. "R&D, International Sourcing, and the Joint Impact on Firm Performance." American Economic Review, 105 (12): 3704-39. DOI: 10.1257/aer.20121530Additional Materials
JEL Classification
- D25 Intertemporal Firm Choice, Investment, Capacity, and Financing
- F14 Empirical Studies of Trade
- G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
- H25 Business Taxes and Subsidies including sales and value-added (VAT)
- L25 Firm Performance: Size, Diversification, and Scope
- O32 Management of Technological Innovation and R&D
- O33 Technological Change: Choices and Consequences; Diffusion Processes