No money, no honey? Financial versus knowledge and demand constraints on innovation

Abstract

The paper adds to the literature on the barriers to innovation in two ways. First, we assess comparatively what mostly constrains firms' ability to translate investment in innovation activity into new products and processes, whether it is mainly finance, as most of the literature would suggest, or whether it is mostly knowledge and marketrelated aspects. Second, we suggest a method to correct for the sample selection bias that often affects empirical contributions to this scholarship. By filtering out firms that are not interested in innovation from those that struggle to engage in it, we obtain a relevant sample of potential innovators, which allows us to analyse the comparative effect of financial and non-financial barriers on innovation success. We find that demand-side factors, particularly concentrated market structure and lack of demand, are as important as financial constraints in determining firms' innovation failures. This evidence redirects attention from financial to non-financial barriers by considering traditional demand, market structure and regulation factors involved in reduced firm innovation performance. The empirical analysis is based on an unbalanced panel of firm-level data from four waves of the UK Community Innovation Survey (CIS) between

University–industry linkages and academic engagements: individual behaviours and firms’ barriers. Introduction to the special section

“…Also, firms might establish cooperation with different private and public partners, such as universities and public research institutes, to alleviate the effects of barriers to innovation, in particular those related to knowledge accumulation and diffusion (Davey et al 2016;D'Este et al 2012D'Este et al , 2013Hall et al 2001;Pellegrino and Savona 2017) that might affect their innovation and economic performance (Coad et al 2016). This special section hosts novel contributions that shed light on the nature of barriers to innovation and their specific effects when it comes to establishing cooperation with universities and public research institutes.…”

Impacto de los obstáculos al conocimiento en la innovación de las empresas chilenas

“…Esta literatura, sin embargo, se ha centrado principalmente en los efectos de los obstáculos financieros (Schneider et al, 2010;Blanchard et al, 2013;Pellegrino & Savona, 2017), incluyendo trabajos que han estimado efectos heterogéneos por sector productivo (Hottenrott & Peters, 2012) y por tamaño de empresas y tipo de innovación (Álvarez & Crespi, 2015).…”

“…En los últimos años se han ido desarrollando estudios que intentan dilucidar la importancia de otros obstáculos, ya sean obstáculos de conocimiento, de mercado o de políticas (Pellegrino & Savona, 2017;Blanchard et al, 2013;D'Este, Rentocchini & Vega-Jurado, 2014). Por ejemplo, Pellegrino & Savona (2017) utilizan datos para el Reino Unido y encuentran que factores relacionados a la demanda y al mercado de las innovaciones son tan importantes como factores financieros para disminuir la innovación.…”

“…Por ejemplo, Pellegrino & Savona (2017) utilizan datos para el Reino Unido y encuentran que factores relacionados a la demanda y al mercado de las innovaciones son tan importantes como factores financieros para disminuir la innovación. Blanchard, et al (2013) distinguen entre obstáculos financieros y no financieros y encuentran que ambos juegan un papel significativo en disminuir la innovación de las empresas; D 'Este, et al (2014) se centran en estudiar la complementariedad del capital humano y los obstáculos a la innovación, tanto financieros como no financieros.…”

Innovation strategies of energy firms

“…We follow the recent literature (Blanchard, Huiban, Musolesi, & Sevestre, 2013;D'Este, Iammarino, Savona, & von Tunzelmann, 2012;Pellegrino & Savona, 2017;Savignac, 2008) and focus exclusively on potential innovators. We follow the recent literature (Blanchard, Huiban, Musolesi, & Sevestre, 2013;D'Este, Iammarino, Savona, & von Tunzelmann, 2012;Pellegrino & Savona, 2017;Savignac, 2008) and focus exclusively on potential innovators.…”