This paper examines empirically the relationship between innovative activity, as measured by the rate of return to research-and-development expenditures, and firm size using a sample of firms from the chemicals and allied products industry (SIC 28). We find that size is a prerequisite for successful innovative activity. The estimated rate of return to research and development for the smaller firms is 30 percent, while for the larger size firms it is 78 percent. Statistical tests for structural stability were used to divide the sample into these two behavioral regimes.

This paper examines empirically the relationship between innovative activity, as measured by the rate of return to research-and-development expenditures, and firm size using a sample of firms from the chemicals and allied products industry (SIC 28). We find that size is a prerequisite for successful innovative activity. The estimated rate of return to research and development for the smaller firms is 30 percent, while for the larger size firms it is 78 percent. Statistical tests for structural stability were used to divide the sample into these two behavioral regimes.

Universities are a key institution in the U.S. innovation system, and an important aspect of their involvement is the role they play in public-private partnerships. This note offers insights into the performance of industry-university research partnerships, using a survey of precommercial research projects funded by the Advanced Technology Program. Although results must be interpreted cautiously because of the small size of the sample, the study finds that projects with university involvement tend to be in areas involving new science and therefore experience more difficulty and delay, yet are more likely not to be aborted prematurely. Our interpretation is that universities are contributing to basic research awareness and insight among the partners in ATP-funded projects.