Despite the existence of much theoretical research analyzing the potential benefits and costs of R&D consortia, there has been little corresponding empirical work on their efficacy. In this paper, we undertake a large-sample econometric study of Japanese government-sponsored research consortia. We find evidence that frequent participation in these consortia has a positive impact on research expenditure and research productivity. These results hold after controlling for the potential endogeneity of intensity of participation in consortia to participating firms’ research productivity. Furthermore, we find evidence that part of this impact arises from the increased knowledge spillovers that take place within these consortia.