We focus on the evolution and behavior of firms that invest in research and development (R&D). We build upon the cross-sectional analysis in Foster and Grim (2010) that identified the characteristics of top R&D spending firms and follow up by charting the behavior of these firms over time. Our focus is dynamic in nature as we merge micro-level cross-sectional data from the Survey of Industrial Research and Development (SIRD) and the Business Research & Development and Innovation Survey (BRDIS) with the Longitudinal Business Database (LBD). The result is a panel firm-level data set from 1992 to 2011 that tracks firms' performances as they enter and exit the R&D surveys. Using R&D expenditures to proxy R&D performance, we find the top R&D performing firms in the U.S. across all years to be large, old, multinational enterprises. However, we also find that the composition of R&D performing firms is gradually shifting more towards smaller domestic firms with expenditures being less sensitive to scale effects. We find a high degree of persistence for these firms over time. We chart the history of R&D performing firms and compare them to all firms in the economy and find substantial differences in terms of age, size, firm structure and international activity; these differences persist when looking at future firm outcomes.
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Characteristics of the Top R&D Performing Firms in the U.S.: Evidence from the Survey of Industrial R&D
September 2010
Working Paper Number:
CES-10-33
Innovation drives economic growth and productivity growth, and as such, indicators of innovative activity such as research and development (R&D) expenditures are of paramount importance. We combine Census confidential microdata from two sources in order to examine the characteristics of the top R&D performing firms in the U.S. economy. We use the Survey of Industrial Research and Development (SIRD) to identify the top 200 R&D performing firms in 2003 and, to the extent possible, to trace the evolution of these firms from 1957 to 2007. The Longitudinal Business Database (LBD) further extends our knowledge about these firms and enables us to make comparisons to the U.S. economy. By linking the SIRD and the LBD we are able to create a detailed portrait of the evolution of the top R&D performing firms in the U.S.
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R&D or R vs. D?
Firm Innovation Strategy and Equity Ownership
April 2020
Working Paper Number:
CES-20-14
We analyze a unique dataset that separately reports research and development expenditures
for a large panel of public and private firms. Definitions of 'research' and 'development' in this dataset, respectively, correspond to definitions of knowledge 'exploration' and 'exploitation' in the innovation theory literature. We can thus test theories of how equity ownership status relates to innovation strategy. We find that public firms have greater research intensity than private firms, inconsistent with theories asserting private ownership is more conducive to exploration. We also find public firms invest more intensely in innovation of all sorts. These results suggest relaxed financing constraints enjoyed by public firms, as well as their diversified shareholder bases, make them more conducive to investing in all types of innovation. Reconciling several seemingly conflicting results in prior research, we find private-equity-owned firms, though not less innovative overall than other private firms, skew their innovation strategies toward development and away from research.
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The Role of Industry Classification in the Estimation of Research and Development Expenditures
November 2014
Working Paper Number:
CES-14-45
This paper uses data from the National Science Foundation's surveys on business research and development (R&D) expenditures that have been linked with data from the Census Bureau's Longitudinal Business Database to produce consistent NAICS-based R&D time-series data based on the main product produced by the firm for 1976 to 2008.The results show that R&D spending has shifted away from domestic manufacturing industries in recent years. This is due in part to a shift in U.S. payrolls away from manufacturing establishments for R&D-performing firms.These findings support the notion of an increasingly fragmented production system for R&D-intensive manufacturing firms, whereby U.S. firms control output and provide intellectual property inputs in the form of R&D, but production takes place outside of the firms' U.S. establishments.
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Allocation of Company Research and Development Expenditures to Industries Using a Tobit Model
November 2015
Working Paper Number:
CES-15-42
This paper uses Census microdata and a regression-based approach to assign multi-division firms' pre-2008 Research and Development (R&D) expenditures to more than one industry. Since multi-division firms conduct R&D in more than one industry, assigning R&D to corresponding industries provides a more accurate representation of where R&D actually takes place and provides a consistent time-series with the National Science Foundation R&D by line of business information. Firm R&D is allocated to industries on the basis of observed industry payroll, as befits the historic importance of payroll in Census assignments of firms to industry. The results demonstrate that the method of assigning R&D to industries on the basis of payroll works well in earlier years, but becomes less effective over time as firms outsource their manufacturing function.
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Innovation and Appropriability: Revisiting the Role of Intellectual Property
March 2022
Working Paper Number:
CES-22-09
It is more than 25 years since the authors of the Yale and Carnegie surveys studied how firms seek to protect the rents from innovation. In this paper, we revisit that question using a nationally representative sample of firms over the period 2008-2015, with the goal of updating and extending a set of stylized facts that has been influential for our understanding of the economics of innovation. There are five main findings. First, while patenting firms are relatively uncommon in the economy, they account for an overwhelming share of R&D spending. Second, utility patents are considered less important than other forms of IP protection, like trade secrets, trademarks, and copyrights. Third, industry differences explain a great deal of the level of firms' engagement with IP, with high-tech firms on average being more active on all forms of IP. Fourth, we do not find any significant difference in the use of IP strategies across firms at different points of their life cycle. Lastly, unlike age, firms of different size appear to manage IP significantly differently. On average, larger firms tend to engage much more extensively in the protection of IP, and this pattern cannot be easily explained by differences in the type of R&D or innovation produced by a firm. We also discuss the implications of these findings for innovation research and policy.
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A Guide To R&D Data At The Center For Economic Studies U.S. Bureau Of THe Census
August 1994
Working Paper Number:
CES-94-09
The National Science Foundation R&D Survey is an annual survey of firms' research and development expenditures. The survey covers 3000 firms reporting positive R&D. This paper provides a description of the R&D data available at the Center for Economic Studies (CES). The most basic data series available contains the original survey R&D data. It covers the years 1972-92. The remaining two series, although derived from the original files, specialize in particular items. The Mandatory Series contains required survey items for the years 1973-88. Items reported at firms' discretion are in the Voluntary Series, which covers the years 1974-89. Both of the derived series incorporate flags that track quality of the data. Both also include corrections to the data based on original hard copy survey evidence stored at CES. In addition to describing each dataset, we offer suggestions to researchers wishing to use the R&D data in exploring various economic issues. We report selected response rates, discuss the survey design, and provide hints on how to use the data.
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R&D Reactions To High-Technology Import Competition
March 1991
Working Paper Number:
CES-91-02
For a seventeen-year panel covering 308 U.S. manufacturing corporations, we analyze firms' R&D spending reactions to changes in high-technology imports. On average, companies reduced their R&D/sales ratios in the short run as imports rose. Individual company reactions were heterogeneous, especially for multinational firms. Short-run reactions were more aggressive (i.e., tending toward R&D/sales ratio increases), the more concentrated the markets were in which the companies operated, the larger the company was, and the more diversified the firm's sales mix was. Reactions were less aggressive when special trade barriers had been erected or patent protection was strong in the impacted industries. Companies with a top executive officer educated in science or engineering were more likely to increase R&D/sales ratios in response to an import shock, all else equal. Over the full 17-year sample period, reactions may have shifted toward greater average aggressiveness.
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Growth is Getting Harder to Find, Not Ideas
April 2025
Working Paper Number:
CES-25-21
Relatively flat US output growth versus rising numbers of US researchers is often interpreted as evidence that "ideas are getting harder to find." We build a new 46-year panel tracking the universe of U.S. firms' patenting to investigate the micro underpinnings of this claim, separately examining the relationships between research inputs and ideas (patents) versus ideas and growth. Over our sample period, we find that researchers' patenting productivity is increasing, there is little evidence of any secular decline in high-quality patenting common to all firms, and the link between patents and growth is present, differs by type of idea, and is fairly stable. On the other hand, we find strong evidence of secular decreases in output unrelated to patenting, suggesting an important role for other factors. Together, these results invite renewed empirical and theoretical attention to the impact of ideas on growth. To that end, our patent-firm bridge, which will be available to researchers with approved access, is used to produce new, public-use statistics on the Business Dynamics of Patenting Firms (BDS-PF).
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USING LINKED CENSUS R&D-LRD DATA TO ANALYZE THE EFFECT OF R&D INVESTMENT ON TOTAL FACTOR PRODUCTIVITY GROWTH
January 1989
Working Paper Number:
CES-89-02
Previous studies have demonstrated that productivity growth is positively correlated with the intensity of R&D investment. However, existing studies of this relationship at the micro (firm or line of business) level have been subject to some important limitations. The most serious of these has been an inability to adequately control for the diversified activities of corporations. This study makes use of linked Census R&D - LRD data, which provides comprehensive information on each firms' operations at the 4-digit SIC level. A marked improvement in explaining the association between R&D and TFP occurs when we make appropriate use of the data by firm by industry. Significant relationships between the intensities of investment in total, basic, and company-funded R&D, and TFP growth are confirmed.
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Innovation, Productivity Dispersion, and Productivity Growth
February 2018
Working Paper Number:
CES-18-08
We examine whether underlying industry innovation dynamics are an important driver of the large dispersion in productivity across firms within narrowly defined sectors. Our hypothesis is that periods of rapid innovation are accompanied by high rates of entry, significant experimentation and, in turn, a high degree of productivity dispersion. Following this experimentation phase, successful innovators and adopters grow while unsuccessful innovators contract and exit yielding productivity growth. We examine the dynamic relationship between entry, productivity dispersion, and productivity growth using a new comprehensive firm-level dataset for the U.S. We find a surge of entry within an industry yields an immediate increase in productivity dispersion and a lagged increase in productivity growth. These patterns are more pronounced for the High Tech sector where we expect there to be more innovative activities. These patterns change over time suggesting other forces are at work during the post-2000 slowdown in aggregate productivity.
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