The Contribution of R&D Investment to Productivity in the South Korean Service Sector
The purpose of corporate R&D investment is to improve productivity, and the way in which R&D investment increases productivity was structured very effectively by Crepon et al (1998). This model is called the CDM model and first stage of the process is the choice of R&D investment by firms affected by the market structure.
The selected R&D investment in the firm has formed a knowledge asset and this is the source of primary innovation performance, such as patents or sales of the innovative product.
Finally, investment in R&D leads to higher productivity of companies.