This paper investigates the main factors that determine R&D at the firm level, using data from Greek Manufacturing for 1996-1999. The approach adopted combines the recommendations of the industrial organization and the resourcebased view of the firm lines of analysis. Results indicate that R&D is positively influenced by firm size, technological environment, human capital, physical capital and government support. It is also shown that firms which are engaged in R&D activities improve their performance faster than the average firms that belong to the same industries.

JEL Classification: O31.