Allocating R and D Resources: A Study of the Determinants of R and D by Character of Use

摘要

An empirical analysis is presented of firm and industry characteristics important in determining the firm's allocation of its research and development (R and D). It was found that a set of firm characteristics can be identified as influencing the firm's allocation of its R and D. Factors important in determining the allocation were found to be unimportant in determining the overall level of R and D spending. The statistical analysis illustrates that profitability and the receipt of Federal R and D are significant determinants of the firm's level of R and D spending, holding constant characteristics of the industry in which the firm produces. In the regression analysis, three industry characteristics are held constant: market concentration, indexes of technological opportunity, and product complexity. The report includes primary data used in the analysis, development of a model of the R and D allocation among its alternative uses, testing of several propositions related to determinants of the R and D allocation; and a discussion of policy considerations. The analysis attempts to illustrate that R and D is a heterogeneous category of activities and that no one set of factors influences the firm's decision to allocate R and D funds to any particular use category.