Product innovation, process innovation, and size

We test the hypothesis that large firms devote a higher proportion of their research and development (R&D) expenditure on process innovation than smaller firms. According to the estimates, process- and product R&D expenditure rise less than in proportion to size. The size effect is somewhat stronger for process R&D but the difference to product R&D is in no way dramatic. This difference with regard to size elasticity of process- and product R&D is somewhat more pronounced when accounting for possible interrelationships between expenditure on process- and product R&D but remains statistically non-significant.