The Knowledge Production of 'R' and 'D'

19 Pages Posted: 7 Aug 2008

See all articles by Dirk Czarnitzki

Dirk Czarnitzki

Centre for European Economic Research (ZEW); Catholic University of Leuven (KUL)

Kornelius Kraft

University of Dortmund - Department of Economics; IZA Institute of Labor Economics

Suzanne Thorwarth

Katholieke Universiteit Leuven (KUL) - Faculty of Business and Economics

Date Written: 2008

Abstract

Many studies investigate the relationship between R&D expenditures as an input and patents as an intermediate product or output of a knowledge production function. We suggest that the productivity of research in patent production functions has been underestimated in the literature, as scholars typically use information about R&D, i.e. the sum of research expenditure and development expenditure, due to data availability. However, in most industries only (applied) research will lead to patentable knowledge, and development happens after the initial research phase that may have led to a patent. Instead of using data on R&D, we separate the knowledge creating process into 'R' and 'D'. This data stems from R&D surveys of Belgian firms. It turns out that only the 'R' part of R&D expenditure has a significant effect on patents and that development expenditure are insignificant. Thus previous literature relying on R&D expenditure suffers from a measurement error, such that the coefficient of R&D is biased towards zero, as R&D includes a large fraction of irrelevant expenditure, i.e. development expenditure, with respect to patenting.

Keywords: Patents, Research, Development, Knowledge Production Function

JEL Classification: O31, O32

Suggested Citation

Czarnitzki, Dirk and Kraft, Kornelius and Thorwarth, Suzanne, The Knowledge Production of 'R' and 'D' (2008). ZEW - Centre for European Economic Research Discussion Paper No. 08-046, Available at SSRN: https://ssrn.com/abstract=1210262 or http://dx.doi.org/10.2139/ssrn.1210262

Dirk Czarnitzki (Contact Author)

Centre for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
Mannheim, 68034
Germany

Catholic University of Leuven (KUL) ( email )

Faculty of Economics and Business
Naamsestraat 69
Leuven, 3000
Belgium
+32 16 326906 (Phone)
+32 16 325799 (Fax)

HOME PAGE: http://www.econ.kuleuven.be/msi/faculty_members.htm

Kornelius Kraft

University of Dortmund - Department of Economics ( email )

D-44221 Dortmund
Germany
+49 231 755-3152 (Phone)
+49 231 755-3155 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Suzanne Thorwarth

Katholieke Universiteit Leuven (KUL) - Faculty of Business and Economics ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

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