The article “Innovation, R&D Productivity, and Global Market Share in the Pharmaceutical Industry” (Review of Industrial Organization [1995]: 197– 207) presented the results of a multiple regression analysis in which the dependent variable was y = the number of patented R&D compounds per R&D employee. The number of observations was n = 78, the model contained six predictors, and SSResid = 1.02, R2= .50.
a. Is the chosen model useful? Test the relevant hypotheses.
b. What is the value of adjusted R2?
c. The predictor x6 was an indicator variable with value 1 if a firm was headquartered outside the United States. The article reported that b6 = .001 and the corresponding t ratio was .92. Provided that the other five predictors remain in the model, is x6 useful? Test the relevant hypotheses.
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