The R&D And Productivity Relationship Of Korean Listed Firms

ASU Author/Contributor (non-ASU co-authors, if there are any, appear on document)
Dr.. Hye-Sung Kim, Assistant Professor (Creator)
Appalachian State University (ASU )
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Abstract: This study analyzes the relationship between R&D investment and the productivity of Korean R&D-engaged firms. An interdependent chain of equations including the propensity to invest, R&D investment and productivity are estimated in a multi-step procedure accounting for selectivity and simultaneity biases. Using Korean firm level panel data of listed firms from 1986 to 2002, we find four main empirical results. First, there is a two-way causal relationship between R&D investment and productivity for Korean listed firms. Second, Chaebol firms were associated with lower R&D growth as well as lower labor productivity growth in comparison to non-Chaebol firms. Third, there was a substantial reduction in growth rates both in R&D investment and labor productivity in 1997-1998, immediately following the Asian financial crisis. Fourth, considering the positive feedback effect from productivity growth to R&D growth, a decrease in R&D investment growth after the Asian financial crisis should have been harmful by further decreasing productivity growth.

Additional Information

Heshmati A, Kim H. The R&D and productivity relationship of Korean listed firms. Journal of Productivity Analysis. 2011;36(2):125-142. Publisher version of record available at:
Language: English
Date: 2011
Productivity, Financial investments, Manufacturing industries, Labor productivity, Capital investments, Furniture making, Productivity growth, Papermaking

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