Firm Level Investment and R&amp;D in France and the United States: A Comparison

Hall, Bronwyn; Mulkay, Benoît; Mairesse, Jacques

doi:10.3386/w8038

Cited by 79 publications

(75 citation statements)

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“…Himmelberg and Petersen (1994) find a large and significant relationship between R&D and internal finance for small US firms in the high-tech industries. Similar results have been obtained by Mulkay, Hall and Mairesse (2001) for French and US firms. Bond, Harhoff and van Reenen (2003) find that cash flow is not informative about the flow of R&D for panels of German and UK firms.…”

Section: Review Of Empirical Evidence On Financial and Other Obstaclesupporting

confidence: 78%

Financial Constraints and Other Obstacles: are they a Threat to Innovation Activity?

et al. 2008

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In this paper we examine the importance of financial and other obstacles to innovation in the Netherlands using statistical information from the CIS 3.5 innovation survey. We report results on the effect of these obstacles on the firms' decision to abandon, prematurely stop, seriously slow down, or not to start an innovative project. These results are compared with those from other studies in the Netherlands and other countries. We end with a discussion of policy measures that have been taken to overcome, or at least attenuate these obstacles, such as R&D tax incentives, venture capital financing and policy mix pakages.

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Section: Review Of Empirical Evidence On Financial and Other Obstaclesupporting

confidence: 78%

Financial Constraints and Other Obstacles: are they a Threat to Innovation Activity?

et al. 2008

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“…Mairesse et al (1999) and Mulkay et al (2001) for instance estimated dynamic equations for physical as well as R&D investment rates. Based on samples of large French and US manufacturing firms they found evidence that R&D investment rates are highly correlated over time, even more highly correlated than physical capital investments.…”

Section: What Do We Know So Far? Previous Empirical Findingsmentioning

confidence: 99%

Persistence of Innovation: Stylised Facts and Panel Data Evidence

Peters

2005

SSRN Journal

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Die Discussion Papers dienen einer möglichst schnellen Verbreitung von neueren Forschungsarbeiten des ZEW. Die Beiträge liegen in alleiniger Verantwortung der Autoren und stellen nicht notwendigerweise die Meinung des ZEW dar.Discussion Papers are intended to make results of ZEW research promptly available to other economists in order to encourage discussion and suggestions for revisions. The authors are solely responsible for the contents which do not necessarily represent the opinion of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp0581.pdf Non-technical SummaryInnovation is widely considered to be a key long-term driving force for economic growth. In 1993, the Community Innovation Surveys (CIS) were initiated in the European countries to investigate firms' innovation activities. However, there is still very little empirical evidence on the dynamics in firms' innovation behaviour. Looking at innovation indicators at the aggregate or industry level, we can identify a high and quite stable share of innovators in Germany over the last ten years. One interesting question, however, cannot be answered by such macroeconomic numbers: Is it the same group of firms that always set themselves at the cutting edge by introducing new products and processes or is there a steady entry into and exit from innovation activities at the firm level, with the aggregate level remaining more or less stable over time?This paper analyses the dynamics in firms' innovation behaviour. In particular, it focuses on the following two questions: First of all, is innovation persistent at the firm-level? And secondly, if persistence is prevalent, what drives this phenomenon? In principle, there are various potential sources for persistent behaviour: First, it might be caused by true state dependence. This means that a causal effect exists in the sense that the decision to innovate in one period itself enhances the probability of innovating in the subsequent period. The theoretical literature delivers several potential explanations for state dependent behaviour: success breeds success, dynamic increasing returns (learning effects) or sunk costs in R&D investments. On the other hand, firms may possess certain characteristics which make them more likely to innovate. To the extent that these characteristics themselves show persistence over time, they will induce persistence in innovation behaviour. Such firm-specific attributes can be classified into observable characteristics, like firm size, competitive environment, skills or financial resources, and unobservable ones. For instance, technological opportunities, managerial abilities or risk attitudes are important for the firms' decision to innovate, but are typically not observed (unobserved heterogeneity).The answers to both questions are important from a theoretical as well as a policy point of view. From a theoretical point of view they are interesting because endogenous growth models differ in their underlying assumptions about the innovation...

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“…This is consistent with the view that the desire of firms to smooth R&D over time combines with the relatively high cost of financing it to reduce R&D well below the level that would obtain in a frictionless world. Mulkay, Hall, and Mairesse (2001) perform a similar exercise using large French and U.S. manufacturing firms, finding that cash flow impacts are much larger in the U.S. than in France, both for R&D and for ordinary investment. Except for the well-known fact that R&D exhibits higher serial correlation than investment (presumably because of higher adjustment costs), differences in behavior are between countries, not between investment types.…”

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confidence: 99%

The Financing of Research and Development

Hall

2002

Oxford Review of Economic Policy

1,431

779

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Evidence on the "funding gap" for R&D is surveyed. The focus is on financial market reasons for underinvestment in R&D that persist even in the absence of externality-induced underinvestment. The conclusions are that 1) small and new innovative firms experience high costs of capital that are only partly mitigated by the presence of venture capital; 2) evidence for high costs of R&D capital for large firms is mixed, although these firms do prefer internal funds for financing these investments; 3) there are limits to venture capital as a solution to the funding gap, especially in countries where public equity markets are not highly developed; and 4) further study of governmental seed capital and subsidy programs using quasi-experimental methods is warranted.

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Firm Level Investment and R&D in France and the United States: A Comparison

Cited by 79 publications

References 0 publications

Financial Constraints and Other Obstacles: are they a Threat to Innovation Activity?

Financial Constraints and Other Obstacles: are they a Threat to Innovation Activity?

Persistence of Innovation: Stylised Facts and Panel Data Evidence

The Financing of Research and Development

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