Firm-level analysis of determinants of Canadian industrial R&D performance

Abstract

The lower-than-average levels of R&D performed in Canadian industry have long been a source of concern and study. This analysis focuses on the elasticity of R&D investments against size in terms of sales and employment. The results suggest that: there are sectoral differences in elasticity of R&D expenditure, which are not easily explained on the basis of technological sophistication or economies of scale; and, in general, foreign-controlled firms' R&D expenditure is less inelastic than that of Canadian-controlled firms.