Does Entrepreneurial Churn Reach Incumbent R&D? Corruption, Time Horizons, and Evidence from Large European Firms

Abstract Research and development is central to the knowledge economy, yet the mechanisms linking entrepreneurial dynamics and institutional conditions to firm-level R&D remain underspecified. We ask whether large European incumbents adjust their R&D intensity in response to national entrepreneurial churn and institutional conditions. Using Orbis BvD firm-level data merged with Eurostat macro indicators, we construct a panel of 1,693 firms from 19 EU countries over 2017–2023 (10,158 usable lagged observations). We estimate firm and year fixed-effects models with standard errors clustered by country-year, complemented by long-run cross-sectional OLS models for R&D intensity in 2023. Business registrations show no association with within-firm R&D intensity; bankruptcy rates display at most a weak, statistically fragile negative relationship. Trade balance has no systematic effect and does not moderate entrepreneurial entry or exit. Aggregate turnover measures (net entrepreneurial turnover and total churn) also fail to explain R&D intensity. Corruption is the only contextual variable that carries a persistent signal, but its role is time-dependent: in the short-run panel models, higher corruption is positively associated with R&D intensity, whereas in the long-run OLS models the association turns strongly negative. The findings indicate that country-level administrative measures of entrepreneurial movement are too coarse to explain R&D allocation among large incumbents. For the knowledge-economy literature, the main implication is that firm-specific capabilities and institutional quality, particularly corruption, matter more than broad counts of firm births and deaths when explaining sustained R&D investment.