R&D spillover effects and firm performance following R&D increases

Sheng Syan Chen, Yan Shing Chen, Woan-lih Liang, Yanzhi Wang

Research output: Contribution to journalArticlepeer-review

15 Scopus citations


We examine how research and development (R&D) incoming spillovers affect long-run firm performance following firms' R&D increases. We use a stochastic frontier production method to capture R&D incoming spillover effects. Firms reaping more benefits from R&D investment made by other firms experience more improvement in profitability and more favorable long-run stock performance in the post-R&D-increase period. Firms with higher levels of R&D incoming spillovers recruit more key employees from other firms, suggesting that obtaining know-how through hiring is an important source of incoming spillovers. The evidence also shows that firms experiencing more R&D outgoing spillover effects tend to underinvest in R&D.

Original languageEnglish
Pages (from-to)1607-1634
Number of pages28
JournalJournal of Financial and Quantitative Analysis
Issue number5
StatePublished - 1 Jan 2013

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