The determinants of R & D expenditures: A study of the Canadian biotechnology industry

The relative importance of a multitude of factors for the allocation of expenses towards R & D are assessed in an empirical study of the Canadian biotechnology industry. The results show that patent protection and strategic alliances facilitate R & D spending. The results also show that early-stage firms spend a greater proportion of the expenditures on R & D, while firms engaged in R & D in platform technologies and firms with high debt-equity ratios spend a lower proportion of their expenditures on R & D. Demand pull and competition variables are insignificant factors. Finally, counter to our expectations, R & D expenditures are more intensive among firms engaged in R & D in areas in which consumer controversies are more pronounced.