Research quotient

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Research quotient (RQ) is a measure of companies' innovation capability^[1] introduced in the 2008 article, R&D Returns Causality: Absorptive Capacity or Organizational IQ.^[2] The measure was originally referred to as IQ (innovation quotient), but because IQ and innovation quotient were already in use commercially, it was referred to as RQ in subsequent work. The motivating argument in the 2008 article was that the main prescription from absorptive capacity^[3] — that the more a company spends on R&D, the greater its ability to absorb spillovers from rivals' R&D, seemed implausible. This is because the greater the R&D, the closer a company gets to the knowledge frontier, and accordingly, the less likely it can use spillovers. Instead, Knott proposed and found, it was not that spending more led to higher returns, it was that companies have inherently different returns (RQ), and those with higher RQs spend more.