Are R&D firms more efficient than non-R&D firms? This study employs a two-step switching stochastic frontier approach to examine the RD-efficiency nexus. Different from previous studies, this approach corrects the endogenous R&D choice effect in erecting R&D and non-R&D firms' production frontiers and then estimates their technical efficiency and determinants of inefficiency. Using a sample of 7,590 Taiwanese electronics firms, our empirical works show R&D firms, on average, have a higher technical efficiency than non-R&D firms under the conventional setting. While this result reverses as the endogenous R&D choice effect is considered, pointing out the importance of endogenous R&D choice in examining the RD-efficiency link. Moreover, R&D firms are found to have a higher technology frontier than non-R&D firms, indicating the importance of R&D in promoting technological competence. Finally, the positive contribution of R&D activity to production is mainly sourced from accumulated R&D capital rather than current R&D outlay.
|Number of pages||13|
|Journal||Problems and Perspectives in Management|
|State||Published - 2009|
- Stochastic frontier analysis
- Switching regression