We estimate the effect of R&D spillovers on sales realized by products new to the firm (imitation) and new to the market (innovation). It turns out that spillovers from rivals lead to more imitation, while input from customers and research institutions enhance original innovation.

R&D encompasses plenty of activities which are usually summarized under the terms of basic research, applied research and development. Although basic research is often associated with low appropriability it provides the fundamental basis for subsequent applied research and development....