Do Financing Constraints Matter for R&amp;D?

Brown, James Robert; Martinsson, Gustav; Petersen, Bruce C.

doi:10.2139/ssrn.1684731

Cited by 122 publications

(195 citation statements)

References 38 publications

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“…Himmelberg and Petersen (1994) for large incumbent US firms, Harhoff (1998) for German firms, Cincera (2003) for Belgian firms, Bond, Harhoff and Van Reenen (2003) for British firms, but not for German firms, which the authors attribute to institutional differences in financial systems in the two countries. Brown et al (2012) after controlling for smoothing and equity finance access, find financial constraints for R&D investments for a large sample of European firms.…”

Section: A Review Of Empirical Methodologies To Assess Financing Consmentioning

confidence: 96%

“…This methodological framework has become a standard toolbox for studying financial constrains faced by firms when investing in R&D. It has been used by, among others, Harhoff (1998), Bond et al (1999), Mairesse, Mulkay and Hall (1999), Mulkay et al (2001), Brown et al (2012) and more recently Lööf and Nabavi (2014). Most of the studies find internal financing an important determinant of R&D expenditures, suggestive of financial constraints, e.g.…”

Section: A Review Of Empirical Methodologies To Assess Financing Consmentioning

confidence: 99%

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The Sensitivity of R&D Investments to Cash Flows: Comparing Young and Old EU and US Leading Innovators

2015

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Using firm level information on the world leading R&D investors and employing a system GMM estimation, this paper investigates how sensitive R&D investments are to cash flow movements, which would be suggestive of financial constraints. The analysis confirms that over the last decade the R&D investments of younger aged leading innovators appear to be more sensitive to cash flows compared to their older counterparts and that this holds particularly for EU younger aged leading innovators compared to their US counterparts, particularly in medium and high tech sectors.

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Section: A Review Of Empirical Methodologies To Assess Financing Consmentioning

confidence: 96%

Section: A Review Of Empirical Methodologies To Assess Financing Consmentioning

confidence: 99%

The Sensitivity of R&D Investments to Cash Flows: Comparing Young and Old EU and US Leading Innovators

2015

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“…Although existing theory (Tadesse,2005;Sylla et al,2006;Dabla-Norris et al,2012;Brown et al 2012; among others ) asserts that increases in financial development push for larger and newer technological processes as well as better allocation of resources and investments toward innovation, the empirical evidence is not yet conclusive. This is mainly because financial development spurs innovation conditional in different factors, such as the size of the economy, the type of industries, and its institutions (Sylla et al, 2006).…”

Section: Where Do We Stand? a Brief Review Of The Existing Literamentioning

confidence: 99%

“…This is because the adoption of new technologies requires high amounts of physical capital, which is dependent on well-developed capital markets and institutions encouraging long-term investments through the reduction of liquidity risks. In this vein, Brown et al (2012) argue that R&D is susceptible to financing constraints for several reasons. Besides the lack of collateral value and asymmetric information problems, R&D may face adverse selection and moral hazard problems, especially for younger, smaller firms.…”

Section: Where Do We Stand? a Brief Review Of The Existing Literamentioning

confidence: 99%

Does Financial Development Promotes Innovation in Developing Economies? An Empirical Analysis

2015

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Using firm-level data from 2006 to 2013 for a set of developing countries, we examine the effects of financial development on innovation. Financial development boosts innovation by improving resource allocation and investment toward strategic sectors as well as facilitating technology to promote growth. Using binary response models as well as instrumental variable techniques to correct for endogeneity, we find robust but puzzling results. Contrary to most existing literature, financial development has a negative effect on the probability of a firm to innovate. The effect is conditional on firm size, and only larger firms are the ones that benefit from financial development. These results are robust to different measures of financial development. We argue that this is a result of the design of the financial system in regards to the lack of capital and the institutional system. Consequently, developing countries should first generate appropiate insitutional conditions if they want financial development to spur growth through innovation.JEL codes: G00, G23, O31, O29

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“…In another study on 16 European countries, Brown, Martinsson, and Petersen (2012) found strong evidence that the availability of finance promotes R&D. In addition, through a study focused on 22 industries in 18 countries belonging to the OECD, Maskus, Neumann, and Seidel (2012) noted that bank credit and market capitalization have similar effects on the intensity of R&D, and financial development and access to funding also are key reasons for companies in order to make the right choice between two countries when it comes to invest in R&D.…”

Section: The Innovation and Financial Constraints: A Recent Review Ofmentioning

confidence: 99%

Specific Financial Constraints of Innovative Companies: Theoretical Approach

Ettahri¹,

Laachach²

2016

JMAA

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When a small and medium-sized enterprise (SME) decides to invest in an innovative project, it becomes attached to a high level of uncertainty (Hall & Lerner, 2009) and it could meet some financial constraints (Kerr & Nanda, 2014). This work is trying to apprehend the specific financial problems which SMEs, working on innovative projects, might face in a context characterized by a lack of liquidity, and it aims to improve the understanding of previous theoretical and empirical studies that dealt with the subject of financing these innovative companies.Moreover, it appears that it is important to ask the following question: Are there specific financial constraints to innovative SMEs? In order to answer the preceding question, this paper presents firstly the concept of innovation within companies. Secondly, it describes the specificities bound to the diverse financing approaches: in terms of risk, uncertainty, asymmetric information and profitability of an innovative project, while developing a theoretical approach concerning the possible constraints of financing the innovative companies.

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Do Financing Constraints Matter for R&D?

Cited by 122 publications

References 38 publications

The Sensitivity of R&D Investments to Cash Flows: Comparing Young and Old EU and US Leading Innovators

The Sensitivity of R&D Investments to Cash Flows: Comparing Young and Old EU and US Leading Innovators

Does Financial Development Promotes Innovation in Developing Economies? An Empirical Analysis

Specific Financial Constraints of Innovative Companies: Theoretical Approach

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