The R&D performance through time of young, high-technology firms. Methodology and an illustration

M. Teubal*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

6 Scopus citations

Abstract

This paper summarizes the pilot stage of a microeconomic study of the innovation performance through time of young, high-technology Israeli firms. It reports some results for a successful firm designing, producing and selling electronic instruments and systems. The paper begins by surveying some of the difficulties surrounding the collection and organization of data on R&D projects. One of them concerns the definition of the 'Unit for Analysis' - the R&D project. Three criteria are suggested for dividing the stream for innovative activities into R&D projects, and these are applied to group the tens of products, accessories and systems included in the analysis into nine projects. The paper subsequently defines a measure of "direct" project performance or profitability estimate - discounted operating profits per unit of fixed costs - and provides estimates based on R&D and sales data for the products of each project. The final sections analyze the variation of project profitability through time. The increasing profitability observed across generations of a product class is attributed to the adaptability of the firm to changes in the environment, particularly to the availability of new technology which requires the swift design and sale of more complex products. The qualitative history of the various projects suggests that this adaptability is due, to a large extent, to the skills, infrastructure and reputation of the firm accumulated from prior projects, i.e. that the "indirect" profitability of the latter is high. Some estimates of the indirect profitability of early projects are presented. A comparison of the spin-off mechanisms observed in the firm analyzed with those observed in firms of other industries is also undertaken.

Original languageEnglish
Pages (from-to)333-346
Number of pages14
JournalResearch Policy
Volume11
Issue number6
DOIs
StatePublished - Dec 1982

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