Learning through experience in Research & Development: An empirical analysis with Spanish firms

• We analyse the role of learning in firms¹ R&D activities.
• We estimate an innovation production function using count-data econometrics.
• We find that R&D experience affects positively the expected number of innovations.
• The impact of innovations on firms¹ performance increases with R&D experience
• R&D experience helps firms to obtain more innovations and of a higher quality.

In this paper we analyse the role of learning through experience in Research and Development (R&D) activities in strengthening firms' capabilities to achieve innovation outcomes and, subsequently, in obtaining rewards in terms of firms' performance. First, using an innovation production function approach, we estimate a count-data model and find that the number of years of engagement in R&D activities, or R&D experience, has a positive effect on the expected number of product innovations, although at a decreasing rate. In addition, our results suggest that, whereas large firms are more efficient than SMEs in converting R&D investment into product innovations, SMEs seem to be able to draw efficiency gains from R&D experience at least comparable, if not higher, to those obtained by large firms. Secondly, we find that not only the number of innovations but also their impact on firms' performance increase as firms accumulate R&D experience, suggesting that R&D experience helps to obtain not only more innovations but also innovations of a higher quality.