R&D restructuring during the Great Recession and young firms

Garcia-Vega, Maria

Abstract

In this paper, I examine whether the Great Recession of the late 2000s (henceforth abbreviated as GR) had an effect on the organization of R&D in young versus older firms. Using a difference-in-difference approach and propensity score reweighting estimator, for a panel of more than 12,000 Spanish firms from 2005 to 2014, I compare young firms with older firms before and after the GR. I show that young firms implemented three key compositional changes in their R&D policies during the GR as compared to older firms: a) they reduced their R&D employment by firing medium and low-skilled R&D workers; b) they hired high-skilled R&D workers; and c) they increased their capital investments for R&D. These changes in R&D policies suggest that, during the GR, young firms substituted medium and low-skilled R&D workers by high-skilled workers and machines. These effects are mediated by the firms’ financial health.

Citation

Garcia-Vega, M. (2022). R&D restructuring during the Great Recession and young firms. International Journal of Industrial Organization, 81, Article 102819. https://doi.org/10.1016/j.ijindorg.2021.102819

• Journal Article Type: Article
• Acceptance Date: Dec 30, 2021
• Online Publication Date: Jan 10, 2022
• Publication Date: Mar 1, 2022
• Deposit Date: Jan 7, 2022
• Publicly Available Date: Jan 11, 2024
• Journal: International Journal of Industrial Organization
• Print ISSN: 0167-7187
• Electronic ISSN: 1873-7986
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 81
• Article Number: 102819
• DOI: https://doi.org/10.1016/j.ijindorg.2021.102819
• Keywords: Strategy and Management; Industrial relations; Economics, Econometrics and Finance (miscellaneous); Economics and Econometrics
• Public URL: https://nottingham-repository.worktribe.com/output/7169903
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S0167718721001119