| Summary: | 碩士 === 國立臺灣大學 === 經濟學研究所 === 102 === The Schumpeterian hypothesis that large firm size and market power stimulate innovation has been tested by numerous studies. However, there is little evidence in support of the hypothesis, and the consensus regarding the relationship between firm size (market power) and R&;D has also not been reached yet. By using the large Chinese data set from the survey on Industrial Enterprise Statistics for the period from 2000 to 2007, this paper reexamines the Schumpeterian hypothesis.This paper treats a firm’s R&;D activity as a two-stage decision, where whether or not to engage in R&;D (R&;D propensity) is determined in the first stage and R&;D intensity is then determined in the second stage by those who decide to undertake R&;D.As a firm’s R&;D intensity may be significantly affected by its R&;D propensity, the Heckman selection model is used to correct for the self-selection problem that may arise from ignoring the relationship between the two stage decisions.Our empirical results show that the Schumpeter hypothesis is valid for a firm’s decision on whether or not to undertake R&;D, but it is not for the R&;D intensity.
Specifically, the paper shows that firm size and market power (measured by CR4) have positive effects on R&;D propensity, but their effects on R&;D intensity are no longer linear and display U shape for firm size and inverted-U shape for market power .
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