Financial Constraint and R&D Investment: Evidence from CIS

Tiwari, Amaresh, Mohnen, Pierre, Palm, Franz and Schim van der Loeff, Sybrand (2007). Financial Constraint and R&D Investment: Evidence from CIS. UNU-MERIT.

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  • Author Tiwari, Amaresh
    Mohnen, Pierre
    Palm, Franz
    Schim van der Loeff, Sybrand
    Title Financial Constraint and R&D Investment: Evidence from CIS
    Publication Date 2007
    Publisher UNU-MERIT
    Abstract Using direct information on financial constraints from questionnaires, rather than the commonly used balance sheet information, this paper presents evidence that, controlling for traditional factors as size, market share, cooperative arrangement, and expected profitability, financial constraints affect a firm's decision of how much to invest in R&D activities. Apart from these constraints, other hampering factors as market uncertainty and institutional bottlenecks, regulations and organizational rigidities also affect R&D investment. A semiparametric estimator of sample selection is employed to control for potential endogeneity of the regressors. The paper also shows that old firms and firms that belong to a group are less financially constrained when it comes to undertaking R&D activities. For the estimation a semiparametric binary choice model is used.
    Copyright Holder UNU-MERIT
    Copyright Year 2007
    ISSN 1871-9872
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    Created: Wed, 11 Dec 2013, 15:48:21 JST