Experience and scale and scope economies: trade-offs and performance in development

This paper examines how knowledge created by firm experience (learning economies) and scale and scope economies affect performance in firms' development activities. The empirical results suggest that each factor has a significant effect on development performance. Moreover, knowledge that results from greater experience within a particular technological area, when combined with knowledge spillovers from greater scope in other technological areas, significantly improves development performance. The results suggest that experience shapes and facilitates firms' abilities to absorb knowledge spillovers. Our empirical findings thus provide a more nuanced examination of the drivers of performance and have implications for the management of firms' development activities.