Essays on the consequences of research and development for manufacturing firms in Ireland

Abstract

The aim of this thesis is to investigate some of the economic consequences for manufacturing firms of investing in research and development (R&D), using the Irish manufacturing sector as a case study. Chapter 1 outlines summary statistics on R&D in Irish manufacturing and the current policy objective of increasing R&D investment in Ireland. The aims, data sources and structure of the thesis are also outlined. Chapter 2 benchmarks the post-entry survival and growth of almost 4,000 indigenous new entrant plants that entered the Irish manufacturing sector over the period 1985 to 1995. A limitation of earlier studies that have explored the effect of innovation on the post-entry survival and growth of new entrant plants has been the use of sectoral level innovation data. This has restricted the authors from reaching conclusions about the role of innovative activity within a plant on its subsequent survival and growth. Using a panel dataset of almost four thousand plants which entered the Irish manufacturing sector over the period 1985-1995, we find that innovating plants have a higher probability of survival, but having survived, enjoy lower annual growth rates than non-innovators. In addition, we suggest that a major advantage for an innovating plant is that its post-entry growth is not constrained by initial size. In contrast, we find that initial size remains a significant explanatory factor in the subsequent growth of non-innovating plants.