Firm size and R&D spending: testing for functional form.

UNCG Author/Contributor (non-UNCG co-authors, if there are any, appear on document)
Albert N. Link, Professor (Creator)
The University of North Carolina at Greensboro (UNCG )
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Abstract: One of the most frequently investigated topics in the economics of technological change literature is the relationship between firm size and the corresponding level of R&D spending. Over more than three decades researchers have been examining numerous functional forms in an effort to determine whether large firms spend more on R&D relative to their size than do smaller firms. Over time, a double-log regression model has evolved to be the "accepted" specification.1 However, the statistical appropriateness of a particular functional form has received almost no attention.2 This paper tests for functional form using an extended Box-Cox model. We conclude from our analysis of firm-level industrial data that there is considerable evidence to suggest that the double-log specification is, in fact, the most appropriate within the class of models represented by the Box-Cox transformation.

Additional Information

Language: English
Date: 1988
economic literature, economic research, firm size, R&D spending, research and development spending, economics

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