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, SybrandTitle 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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