Máñez, JA and Love, JH orcid.org/0000-0003-3478-685X (2020) Quantifying sunk costs and learning effects in R&D persistence. Research Policy, 49 (7). 104004. ISSN 0048-7333
Abstract
This paper analyzes and quantifies the fundamental factors that are likely to cause persistence in performing R&D activities: the existence of sunk costs associated with R&D activities and the process of learning that characterizes this type of activity. We estimate our model with Spanish manufacturing firms for the period 1991-2014. By decomposing the effects of sunk costs and learning effects, we find that both are important determinants of R&D persistence, and that failing to allow for learning systematically overestimates sunk cost effects. Both large firms and SMEs benefit from direct and indirect (via productivity) effects of R&D experience, but in large firms this is more likely to be manifest through productivity improvements while in smaller firms the effect is more skewed towards a direct effect on R&D likelihood. Further, our results suggest that whereas the impact of sunk costs in R&D persistence is greater for large firms than for SMEs, the scope for direct learning from continuous R&D engagement is greater for SMEs than for larger firms.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2020 Elsevier B.V. All rights reserved. This is an author produced version of an article published in Research Policy. Uploaded in accordance with the publisher's self-archiving policy. |
Keywords: | R&D persistence; Sunk costs; Learning effects, JEL: O32, L60 |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > International Business Division (LUBS) (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 29 May 2020 12:40 |
Last Modified: | 10 Dec 2021 01:38 |
Status: | Published |
Publisher: | Elsevier |
Identification Number: | 10.1016/j.respol.2020.104004 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:161351 |