Efficiency, R&D and ownership - some empirical evidence

Investments in R&D create an immaterial capital asset, which is expected to have a positive influence on firms' efficiency and consequently on their profit. Nonetheless, the short-term effects of current investments in R&D are difficult to prove. Therefore, this paper focuses on analyses based on the technical efficiency methodology using a stochastic frontier approach in order to investigate the influence of R&D activities on the technical efficiency of the firms. Using a sample of 2370 Danish firms, the analysis suggests that R&D-active firms are significantly more efficient than other firms. The legal form of ownership also affects the efficiency significantly, whereas firms owned by large shareholders - who are expected to exert a disciplinary influence on the managers of the firm - do not seem to be more efficient than other firms. (C) 2002 Elsevier Science B.V. All rights reserved.