WHY SOME R-AND-D ORGANIZATIONS ARE MORE PRODUCTIVE THAN OTHERS

Highly productive firms use their capital, labor and material resource s more effectively to create product values than do less productive fi rms. A measure of this effectiveness is ''total factor productivity'' (TFP). studies have shown that gains in the TFP of individual firms ar e directly related to the intensity of their investment in R&D, primar ily to investments for product and process development. R&D expenditur es for basic research also contribute to productivity growth, but thei r contribution is indirect, enhancing the gains realized through produ ct and process development. On the other hand a firm's R&D expenditure s for technical service may have a negative impact on its productivity growth. other factors such as the complexity of the R&D organization, and technology planning practices also appear to influence the produc tivity growth of firms.