By Christian Genthon
This paper revisits the theme of the relationships between innovation, profitability, and firm size by taking a long view (18 years, from 1983 to 2000) of the computer industry. The industrial dynamics of this industry lead to the hypothesis that it went through a competition regime change during the period. Our empirical analysis is based on a proprietary database derived from the top 60 firms in the sector. It shows that there is no relationship between R&D spending and firm size nor between R&D spending and profitability. However, the relationship between profit and size is more complex and depends on the time period and therefore the industrial organization of the sector. JEL L1, L6, O3.