Absorptive Capacity- R&D Spending

1. Absorptive Capacity- R&D Spending • R&D contributes to a firm’s absorptive capacity • Determinants of R&D intensity • Demand • Appropriability • Technological opportunity

2. Model- R&D Incentives • Absorptive capacity will have a mediating effect on the determinants

3. Model- Sources of Technical Knowledge • Key= must have absorptive capacity from your firm’s own R&D in order to use spillover

4. Hypotheses • Ease of Learning- absorptive capacity will have greater impact in more difficult learning environments • Competitors are less able to tap into spillover • R&D becomes more of a private good because it is not readily usable by other firms • Technological Opportunity- more available information will elicit more R&D • Appropriability- Spillovers provide more incentive to conduct R&D