The relation between firm size and R&D productivity in different technological regimes

Although the relation between firm size and innovation has been much studied in the literature, theoretical frameworks and empirical evidence remain inconclusive. This paper proposes a contingent approach where the prevailing technological regime of each firm impacts on the relation between size and R&D. The study formulates four propositions concerning the moderating effects that the different dimensions of the technological regimes (conditions of appropriability, technological opportunity, and knowledge cumulativeness) may exert on the size-innovation relation. To test our arguments against the empirical evidence, we define a taxonomy of technological regimes via a sample of Spanish manufacturing firms; the effects of firm size on R&D productivity are then analyzed for each of the identified regimes. The results show that the relation between firm size and innovation depends on the technological regime. Smaller firms are favored by regimes characterized by the proximity to the science system, the use of intellectual property rights as a means of appropriation, or by low knowledge cumulativeness. Meanwhile, the innovation performance of larger firms is comparatively better in regimes with limited use of intellectual property rights and where the relationships with clients and suppliers are important sources of opportunities for innovation. (C) 2012 Elsevier Ltd. All rights reserved.