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Why do some firms undertake R&D whereas others do not?

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Data for the UK show Northern Ireland remains at the bottom of the productivity league table, and that its R&D performance is consistently amongst the lowest across the UK regions. This paper analyses the data from a survey of some 250 matched firms operating in Northern Ireland (approximately half undertaking R&D and half not), in order to provide a more detailed analysis of attitudes to undertaking R&D in the Province. We consider a range of factors that determine whether R&D takes place (such as absorptive capacity, market orientation, business objectives, and competitive advantages). Conditional on whether R&D occurs, the analysis then looks at, firstly, the determinants of the R&D capital stock and intensity; before concentrating on those firms who undertook no R&D and analysing which factors might make them likely to engage in such activities in the future. Policy conclusions are then drawn as to what might be done to boost both the amount of R&D undertaken and the number of firms engaged in R&D in the Province.

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