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Firm size and types of innovation
2009
Economics of Innovation and New Technology
We propose a general theory of innovation that illustrates the relative benefits of performing process versus product R&D when firm size is endogenous. A firm's size, scope, and R&D portfolio are shown to reflect the same underlying characteristic of the firm, namely manufacturing efficiency. We demonstrate that efficient firms become larger, have greater scope, and perform more of both process and product R&D. In light of decreasing returns to R&D, this implies small firms obtain more product
doi:10.1080/10438590701785850
fatcat:w3s7afygxbh3hi3cfydt5eadhe