The Effects Of Intra-industry R&D Spillovers On Firm's R&D Investment And Output

The externality of research and development (R&D), or R&D spillovers, has played an important role in firm's innovation. Firm's R&D investment and output are influenced by the intra-industry R&D spillovers. Due to China's vast territory and the different policies government makes in different regions, firms' innovation activities are significantly different in regions and industries, and the effects of R&D spillovers on firm's investment and output are also different. In order to improve firm's innovative ability in different regions and different industries and help government to make more effective policy, it is necessary to fully understand the effects of intra-industry R&D spillovers on firm's R&D investment and output.Based on the research of D' Aspremont & Jacquemin (1988), this article analyses the mechanism of how intra-industry R & D spillovers affect firm's R&D investment and output. Then, we establish equations and use Chinese industrial enterprises database from 2005 to 2007 to test the effects of R&D spillovers on firm's investment and output with fixed effect model. The result of total sample regression shows that intra-industry R&D spillovers have a significant positive effect on firm's R&D investment. Some internal factors (such as firm size, capital intensity and export) and external factors (such as subsidy, market competition degree and scientific expenditure) have positive effects on firm's R&D investment. We test and confirm that Firm's R&D investment and intra-industry R&D spillovers in the same city contribute to firm's output. Other control variables, such as export and city road density, also have positive effects on firm's output, but the employment density of manufacturing affects firm's output negatively.Considering the economic differences in China, we separately test the sample from different regions. The results show that intra-industry R&D spillovers have a significant positive effect on firm's R&D investment in the eastern region and the central region, but not significant in the western region. The effect of intra-industry R&D spillovers on firm's output is just significant in the eastern region. Intra-industry R & D Spillovers show a positive influence on firm's R&D investment in the labor intensive, capital intensive and technology intensive industry, but the estimated coefficients are different. The elastic coefficient of firm's output to intra-industry R & D spillovers is large in capital-intensive industry, but it's larger in techno logy-intensive industry. The elastic coefficient of labor-intensive industry is the minimum one. According to the results of this article, and combined with the situations in different regions and different industries, some effective policies are given at last.