Determinants of Firm R&D: The Role of Relationship-Specific Interactions for R&D Spillovers

Research and Development (R&D) is a key component behind technological development and economic growth; therefore, understanding the drivers of R&D is crucial. An interesting question is the role of technology spillovers, transferred by trade, and their impact on firm R&D. Here we analyze not only how international and domestic inter- and intra-industry technology spillovers affect firm R&D but also the relatively unexplored issue of how relationship-specific interactions between buyer and seller affect such spillovers. We find international technology spillovers to be larger and more significant than domestic inter- and intra-industry spillovers. Moreover, relationship-specific interactions between seller and buyer enhance technology spillovers in general and international spillovers in particular.