R versus D: estimating the differentiated effect of research and development on innovation results

Abstract

Using firm-level data, this article analyzes the differentiated effect of research and development on different innovation outputs. Although research activities and development activities are different in many aspects, most empirical studies have treated them as a homogeneous activity, mainly due to the lack of data. Our results show that both activities contribute to the innovation success of a firm, but we also find interesting differences. Particularly, we find that development activities are more important for product innovation and sales from new products. When analyzing industry patterns, we find that the payoffs from development and specifically from research are higher in low-tech industries.