The effects of the limited exhaustibility of knowledge on firm size and the direction of technological change

Abstract The new knowledge intensive direction of technological change is magnified at the firm level by limited exhaustibility knowledge. This triggers cumulability and extensibility for which larger firm, lower generation costs from using a stock existing knowledge, exploitation related to output based on use same piece consequences are twofold. First, size, share intangible capital in total capital. Second, elasticity increases with size firm. We test our hypotheses data US listed companies over period 1977–2016. results ordinary least squares, two-stage squares production function estimations confirm theoretical expectations.