Abstract
This study analyzes how internal and external R&D investments affect firm productivity, conditional on the level of competition. It further incorporates the spillover effects of R&D. The analysis is based on firm-level data from the Korean Business Activity Survey for the period 2006–2018. The results show that external R&D has a greater impact in more competitive sectors, consistent with the tendency of low-markup firms to invest more in external R&D. Internal R&D is most effective among firms with lower markups, reflecting an inverted U-shaped relationship between competition and internal R&D intensity. Incorporating spillover effects reduces the productivity gap between internal and external R&D. Notably, only the spillover effects of external R&D are found to have a statistically significant positive impact on productivity.
| Original language | American English |
|---|---|
| Title of host publication | Innovation under Pressure: How Competition Shapes the Productivity Impact of Internal and External R&D |
| Pages | 149-182 |
| Number of pages | 33 |
| State | In preparation - 27 Jun 2025 |
Keywords
- Internal R&D
- External R&D
- Markups
- Total Factor Productivity
- Spillover Effect
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