Effects of R&D spending on productivity of the Russian firms: does technological intensity matter?

We investigate the impact of R&D spending on firm productivity through innovation and human capital channels. To this end, we apply the structural CDM model to analyse a comprehensive Russian-firm level data obtained from the Business Environment and Enterprise Performance Survey supplemented with the Regional Integral Index of Innovation Development. We consider internal and external human capital as well as different levels of firms’ technological intensity. Our first stage of analysis demonstrates that dissatisfaction with employees’ specialisation, import of intermediate products, and firm’s association with larger enterprise augment total R&D expenditures. The second stage of analysis reveals that R&D expenditures, cooperation with universities, personnel training, and regional innovations spur the firm’s innovative sales. Finally, the last stage of our analysis affirms our proposition that innovative sales, capital and labour costs per employee accelerate productivity. Our estimation is robust considering the regional differences. Our empirical findings provide several policy implications.