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- Title
R&D Expenditures and Geographical Sales Diversification.
- Authors
Baum, Christopher F.; Caglayan, Mustafa; Talavera, Oleksandr
- Abstract
This paper empirically examines the role of diversification in export markets on firm-level R&D activities taking account of the potential endogeneity in this relationship. We show that geographical sales diversification across different regions of the world induces UK firms to increase their R&D expenditures, as firms must innovate and develop new products to maintain a competitive edge over their rivals. This finding is robust to a battery of sensitivity checks. Furthermore, we find that R&D expenditures cause higher export sales but do not cause export sales diversification. Hence, the result that diversification causes higher R&D activity is not driven by reverse causality.
- Publication
Manchester School (1463-6786), 2016, Vol 84, Issue 2, p197
- ISSN
1463-6786
- Publication type
Academic Journal
- DOI
10.1111/manc.12092