Abstract
Applying quantile regression to 760 Finnish firms, we show that the relationship between R&D and firm performance is less straight forward than so far assumed. OLS regression analysis fails to capture the effect of R&D expenditure at different locations on the performance distribution. We reveal that R&D matters, especially on the medium quantiles, while regressing against the upper quantiles of the economic gains from innovation distribution exhibit decreasing returns scale in R&D. Our results confirm that Gaussian statistics fail to capture the most interesting part of the distribution – namely the extreme observations located in the tails.
Original language | English |
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Journal | International Review of Applied Economics |
Volume | 24 |
Issue number | 1 |
Pages (from-to) | 95-102 |
Number of pages | 8 |
ISSN | 0269-2171 |
DOIs | |
Publication status | Published - 2010 |
Keywords
- Quantile regression
- R&D
- Economic gains from innovation