The role of extensive and intensive margins in explaining corporate R&D growthEvidence from Spain

Resumen

We analyse the growth of corporate R&D in the Spanish manufacturing sector through its decomposition into the extensive and intensive margins. These margins are decomposed into three distinct components: starting new R&D activities; R&D activities that survive or persist; and deepening existing R&D efforts. The data used is a panel of Spanish manufacturing firms drawn from the Encuesta sobre Estrategias Empresariales, for the period 1990-2006. We show that despite having experienced a substantial increase in R&D, the relative importance of each component differs for small and large firms. We find that small firms would have had a significant higher R&D growth should they be able to improve their performance with respect to the survival component of the intensive margin. For large firms, deepening appears to be the most important component explaining R&D in the long run.