Productivity, Product Differentiation And Profitability In The Greek Chemical Industry: An Empirical Analysis, 1991 And 2001

The purpose of this study is to investigate the relationship between the profitability of the firm and its R&D expenditures. We separate R&D expenditures in two main categories, R&D that focuses on the product differentiation and R&D that concerns improvements in production process. The latter leads to more efficient production, which can be measured by labour productivity. We estimate our model using cross section analysis and test the significance of each one of rhe R&D expenditures in firms profitability. Our model was applied to the Greek chemical industry, for a data set of 124 enterprises, in two distinct years, 1991 and 2001. Our findings support that the role of productivity is growing within time.