R&D, firm size and incremental product innovation

This article addresses an issue that is debated in the economics of innovation literature, namely the existence of increasing returns to R&D expenditures and firm size, in product innovation. It explores further how the firm's structural characteristics and contextual factors affect the sustained introduction of new components over a relatively long time period. Taking advantage of an original and unique database comprising information on new product announcements by leading semiconductor producers, we show that: (i) decreasing returns to size and R&D expenditures characterize the innovation production function of the sampled firms; (ii) producers operating a larger product portfolio exhibit a higher propensity to introduce new products than their specialized competitors; (iii) aging has positive bearings on the firm's ability to innovate.