R&D, International Sourcing, and the Joint Impact on Firm Performance
Esther Ann Bøler, Andreas Moxnes, Karen Helene Ulltveit-Moe
American Economic Review · 2015 · Volume 105 · Issue 12
Abstract
This paper studies the impact of an R&D cost shock on R&D investments, imported inputs, and their joint impact on firm performance. We introduce imported inputs into a model of R&D and endogenous productivity, and show that R&D and international sourcing are complementary activities. Exploiting the introduction of an R&D tax credit in Norway in 2002, we find that cheaper R&D stimulated not only R&D investments but also imports of intermediates, quantitatively consistent with the model. An implication of our work is that improved access to imported inputs promotes R&D investments and, ultimately, technological change. (JEL D92, F14, G31, H25, L25, O32, O33)
Keywords
Intertemporal Firm Choice, Investment, Capacity, and Financing, Empirical Studies of Trade, Capital Budgeting, Fixed Investment and Inventory Studies, Business Taxes and Subsidies including sales and value-added (VAT), Firm Performance: Size, Diversification, and Scope, Management of Technological Innovation and R&D, Technological Change: Choices and Consequences, Diffusion Processes
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