Browsing by Author "Ugur, Mehmet"

Now showing 1 - 4 of 4
  • Thumbnail Image
    ItemOpen Access
    Information asymmetry, risk aversion and R&D subsidies: effect-size heterogeneity and policy conundrums
    (Taylor and Francis, 2022-09-07) Ugur, Mehmet; Trushin, Eshref
    Drawing on the theory of contracts and Schumpeterian models of innovation, we demonstrate that information asymmetry and risk aversion are conducive to effect-size heterogeneity and sub-optimal allocation of R&D subsidies. Utilising an unbalanced panel of 43,650 British firms from 1998 to 2012 and an entropy balancing methodology, we find that R&D subsidies are less likely to generate additionality effects when: (a) firms are larger, older, or more R&D-intensive; and (b) investment in basic research or during crisis episodes is considered. We also report that over 85% of the subsidies are allocated to large, old and R&D-intensive firms that do not deliver additional R&D investment. Our findings reveal a policy conundrum: the case for R&D subsidies is stronger during economic downturns, when R&D investment is in basic research and when firm age, size and R&D intensity reflect success in converting R&D investment into innovative product lines; but the subsidy is less likely to increase business R&D under these conditions.
  • Thumbnail Image
    ItemOpen Access
    Intra-industry firm heterogeneity, myopic adaptation and exit hazard: A fitness landscape approach to firm survival and learning
    (Taylor & Francis, 2020-05-01) Trushin, Eshref; Ugur, Mehmet
    We draw on insights from the fitness landscape literature and from models of firm dynamics with learning to hypothesize that: (i) firms in industries with higher company age or size heterogeneity have higher exit hazard after controlling for age, size, and a variety of other predictors of firm survival; and (ii) higher levels of R&D investment mitigate the hazard-increasing effects of industry firm heterogeneity after controlling for the direct effects of R&D intensities at industry and firm level. We test for these novel sources of selection with evidence from a panel dataset of 35,136 R&D-active UK firms from 1998 to 2012 and a range of discrete-time hazard estimators. The findings, which remain robust to multiple sensitivity checks, offer two novel contributions to the literature: (i) firm heterogeneity is not just a passive precondition for subsequent selection process in industry evolution; this heterogeneity enhances selection as more firms might be stranded in suboptimal positions; (ii) firms in more heterogenous industries can mitigate the hazard-increasing effects through R&D investment that facilitates adaptation and search for better fitness locations.
  • Thumbnail Image
    ItemOpen Access
    Inverted-U relationship between R&D intensity and survival: evidence on scale and complementarity effects in UK data
    (Elsevier, 2016-05-10) Ugur, Mehmet; Trushin, Eshref; Solomon, Edna
    Existing evidence on the relationship between R&D intensity and firm survival is varied and often con-flicting. We argue that this may be due to overlooking R&D scale effects and complementarity betweenR&D intensity and market concentration. Drawing on Schumpeterian models of competition and inno-vation, we address these issues by developing a formal model of firm survival and using a panel datasetof 37,930 of R&D-active UK firms over 1998–2012. We report the following findings: (i) the relationshipbetween R&D intensity and firm survival follows an inverted-U pattern that reflects diminishing scaleeffects; (ii) R&D intensity and market concentration are complements in that R&D-active firms havelonger survival time if they are in more concentrated industries; and (iii) creative destruction as proxiedby median R&D intensity in the industry and the premium on business lending have negative effects onfirm survival. Other findings concerning age, size, productivity, relative growth, Pavitt technology classesand the macroeconomic environment are in line with the existing literature. The results are strongly ormoderately robust to different samples, stepwise estimations, and controls for frailty and left truncation.
  • Thumbnail Image
    ItemOpen Access
    R&D and productivity in OECD firms and industries: A hierarchical meta-regression analysis
    (Elsevier, 2016-08-16) Ugur, Mehmet; Trushin, Eshref; Solomon, Edna; Guidi, Francesco
    The relationship between R&D investment and firm/industry productivity has been investigated widely following seminal contributions by Zvi Griliches and others from late 1970s onwards. We aim to provide a systematic synthesis of the evidence, using 1253 estimates from 65 primary studies that adopt the so-called primal approach. In line with prior reviews, we report that the average elasticity and rate-of-return estimates are positive. In contrast to prior reviews, however, we report that: (i) the estimates are smaller and more heterogeneous than what has been reported before; (ii) residual heterogeneity remains high among firm-level estimates even after controlling for moderating factors; (iii) firm-level rates of return and within-industry social returns to R&D are small and do not differ significantly despite theoretical predictions of higher social returns; and (iv) the informational content of both elasticity and rate-of-return estimates needs to be interpreted cautiously. We conclude by highlighting the implications of these findings for future research and evidence-based policy.