Purpose – The aim of this paper is to assess the effects of traditional inputs and firms' R&D capital on labour productivity growth. Design/methodology/approach – The study measures the effects of the traditional inputs on firms' productivity growth, through four procedures: OLS in first differences, within group, GMM in first differences and GMM system. Findings – Whatever the specification considered, the more efficient estimates obtained from the GMM system show a similar effect of the firm's R&D stock upon its labour productivity performance. Practical implications – The results suggest that physical capital plays a more prominent role for European firms than for US ones, while employees are more productive in the USA. Originality/value – By presenting some empirical evidence on the effects of R&D on labour productivity, at the firm level, the present study makes two main contributions to the existing literature. First, a unique firm‐level database for European and US firms is used. It is self evident that firms in these countries operate in different economic and institutional settings; as a consequence the results identify some robust common effects concerning the two areas considered (the USA versus Europe) at the micro level. Second, service and manufacturing sectors are merged.
International Journal of Manpower – Emerald Publishing
Published: Jun 13, 2008
Keywords: Employee productivity; Productivity rate; Research and development; Mathematical modelling