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American Economic Review Vol. 105 No. 12 2015

R&D, International Sourcing, and the Joint Impact on Firm Performance

Esther Ann Bøler1; Andreas Moxnes2; Karen Helene Ulltveit-Moe3

1 University of Oslo, PO Box 95 Blindern, 0317 Oslo, Norway, ESOP, and CEP (e-mail: ) · 2 University of Oslo, PO Box 95 Blindern, 0317 Oslo, Norway, CEPR, and NBER (e-mail: ) · 3 University of Oslo, PO Box 95 Blindern, 0317 Oslo, Norway, ESOP, and CEPR (e-mail: )

Abstract

This paper studies the impact of an R&D cost shock on R&D investments, imported inputs, and their joint impact on firm performance. We introduce imported inputs into a model of R&D and endogenous productivity, and show that R&D and international sourcing are complementary activities. Exploiting the introduction of an R&D tax credit in Norway in 2002, we find that cheaper R&D stimulated not only R&D investments but also imports of intermediates, quantitatively consistent with the model. An implication of our work is that improved access to imported inputs promotes R&D investments and, ultimately, technological change.

DOI
10.1257/aer.20121530
Volume
105
Issue
12
Pages
3704-3739
Language
en
Sources
openalex bibtex:phds-export.bib crossref

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