Abstract:
Economists have recently grown interested in doing research on research
or R & D, as it is called in industrial circles. Several studies have
tested Schumpeter's hoary hypothesis that large firms are responsible
for most industrial inventive activity.1 Few of these studies, however,
suggest why this hypothesis is apparently valid for some industries and
not for others. And statistical studies going beyond this question, to try
to relate R & D expenditures to firm profit expectations and the availability
of funds as in other investment decisions, are rare (Mansfield,
1964; Mueller, 1967).
