The Impact of R&D Practices on R&D effectiveness (RQ)

Washington University, Saint Louis MO

Investigators

Abstract

In January 2011, President Obama signed into law the America COMPETES Reauthorization Act of 2010. The goal of the act was to invest in innovation through R&D and to improve the competitiveness of the United States. However, increasing investment in and of itself is unlikely to produce desired results. We need to understand who should increase spending and how. NCSES is well-positioned to provide that understanding through its data on firm innovative activities in the Survey of Industrial Research and Development (SIRD) (1987-2007), and its successor, the Business R&D and Innovation Survey (BRDIS) (2008-2011). The proposed study empirically examines the impact of US firms' innovative activities on economic outcomes by matching a new measure of economic performance, firms' Research Quotient (RQ) to the SIRD and BRDIS data. This matching enables us to test major hypotheses within the economics of innovation literature that have been unresolved previously due to lack of reliable firm-level measures of innovative outcomes. These hypotheses pertain to the impact of firm size, market structure, firm heterogeneity, innovation type, innovation source, and appropriability on the incentives to conduct R&D as well as the effectiveness of that R&D. Broader Impact. At the policy-level, the study provides theoretically motivated and empirically rigorous insights for directing investment in innovation for the America COMPETES Reorganization Act of 2010: characteristics of firms likely to generate the highest returns to that investment (who). Second, for practitioners, the study offers firms prescriptions for increasing their R&D effectiveness (how). Thus the study has the potential to increase the aggregate R&D productivity in the US. Finally, for academics, the study will answer long-standing questions in the economics of innovation literature to support future theory development on the optimal conditions for innovation.