This paper documents the relationship between R&D, firm size, and growth rate for a panel data of Taiwanese electronics firms. Using GMM method to control for endogeneity of R&D that is inspired by microeconomic theories of R&D-based endogenous growth models, the main finding is that an increase in R&D induces a higher growth rate and the estimate of the R&D effect might induce an upward bias when treating R&D as an exogenous variable. Testing Gibrat’s law shows that small firms indeed have a higher growth rate than their larger counterparts, while Gibrat’s law does hold for the group of large-scaled firms, supporting the weak form of Gibrat’s law.
Relation:
2003兩岸財經學術研討會論文集=Proceedings of 2003 Straits Conference on Economics and Business，24頁
