A reprise of size and R and D

Numerous studies have shown that within industries, the propensity to perform R and D and the amount of R and D conducted by performers are closely related to the size of the firm, while R and D productivity declines with firm size. These findings have been widely interpreted to indicate that there is no advantage to large firm size in conducting R and D. The authors show how a simple model based on the idea of R and D cost spreading can explain the prior findings about the R and D-firm size relationship, as well as additional features of the R and D-firm size relationship, implying an advantage to large size in R and D.

Duke Scholars

Author Wesley M. Cohen Fuqua School of Business