Buyers, Suppliers, and R&D Spillovers

Author Name IKEUCHI Kenta  (NISTEP) /René BELDERBOS  (University of Leuven / UNU-MERIT / Maastricht University) /FUKAO Kyoji  (Faculty Fellow, RIETI) /Young Gak KIM  (Senshu University) /KWON Hyeog Ug  (Faculty Fellow, RIETI)
Creation Date/NO. April 2015 15-E-047
Research Project East Asian Industrial Productivity
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The role of buyers and suppliers has received little attention in the literature on research and development (R&D) spillovers and productivity, which has focused primarily on the moderating roles of technological and geographic proximity. In this study, we examine R&D spillovers that result from buyer and supplier relationships at the transaction level, utilizing a unique dataset identifying individual buyers and suppliers of Japanese manufacturing firms, matched with data from R&D surveys and the Census of Manufactures. In an analysis of more than 20,000 Japanese manufacturing plants, we find that R&D stocks of buyers and suppliers provide a substantial productivity performance premium over and above the effect of technologically and geographically proximate R&D stocks. These effects are magnified if the supplier and buyer have business group ties based on capital ownership relationships. While the effects of technologically proximate R&D decay with distance, this is not the case for spillovers from buyers and suppliers. Our results identify transaction-based spillovers as a key influence on productivity and social returns to R&D.