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Firm Performance and Business Networks

This research explores the relationship between firm performance and firm participation in business networks. We use integrated administrative datasets to create three measures of firm performance, i.e. productivity, sales and innovation, and three types of business networks, i.e. research and development, commercial and shared directors. We consider a firm to participate in a business network if it files a patent or trademark application with at least one other distinct firm or if it shares a director with at least one other distinct firm.

We explore three scenarios for the effect of firm participation in these business networks. Consider the following example. We observe firm A with four patent applications between 2004 to 2007. Firm A had a joint application with firm B in 2005. The three scenarios we consider include having an effect in 2005 only, having an effect in all years after 2005, i.e. between 2005 and 2007, and having an effect in the whole period, i.e. between 2003 to 2007 (see Table 1).

Table 1: Business network assumptions