R&amp;D INVESTMENT, CREDIT RATIONING AND SAMPLE SELECTION

Piga, Claudio A.; Atzeni, Gianfranco Enrico

doi:10.1111/j.0307-3378.2007.00255.x

Cited by 70 publications

(30 citation statements)

References 39 publications

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“…As an alternative, recent studies investigate rms' access to external funds more directly through the analysis of standardized credit ratings (Czarnitzki 2006, Czarnitzki andHottenrott 2009b) or credit requests (Piga and Atzeni 2007). The main concern using credit requests relates to a selectivity problem as those rms that are constrained most may not expect to get external funding may therefore not ask for it.…”

Section: Empirical Evidencementioning

confidence: 99%

Innovative Capability and Financing Constraints for Innovation More Money, More Innovation?

Hottenrott

Peters

2009

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp09081.pdf Non-technical SummaryEconomic theory suggests that nancing constraints may occur due to capital market imperfections. These particularly aect investments in innovation projects as such projects are typically characterized by a high degree of uncertainty, complexity and specicity.Financing innovation externally is thus likely to be more costly compared to nancing of other investment. Hence, internal sources of nancing are crucial for the implementation of innovation projects. However, internal funds are not inexhaustible either. , then the rm must have had some unexploited investment opportunities that were not protable using more costly external nance'. That is, these rms have been nancially constrained. This study contributes to the literature in the following three main aspects. First, we employ a direct indicator derived from survey information in which rms were oered a hypothetical cash payment. Second, we account for the rm's choice between alternatives of use for the money. Third, we introduce the concept of innovative capability and how it aects nancing constraints for innovation.The results from our econometric analysis show that nancial constraints for innovation do not depend on the availability of funds per se, but are driven by innovative capability through increasing resource requirements. That is, rms with high innovative capability but low nancial resources are more likely constrained than others. Yet, we also observe constraints for nancially sound rms that may have to put some of their ideas on the shelf. Firms with low innovative capability choose other options, such as investment in physical capital. Taking account of all options for usage of the additional money, we further nd in contrast to the innovation decision, the decision to serve debt is to a large extent driven by the nancial background. Firms with low internal funds or a bad credit rating would primarily repay debt instead of investing additional cash in innovation projects. Abstract: This study presents a novel empirical approach to identify nancing constraints for innovation based on the idea of an ideal test as suggested by Hall (2008). Firms were oered a hypothetical payment and were asked to choose between alternatives of use. If they choose additional innovation projects they must have had some unexploited investment opportunities that were not protable using more costly external...

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Section: Empirical Evidencementioning

confidence: 99%

Innovative Capability and Financing Constraints for Innovation More Money, More Innovation?

Hottenrott

Peters

2009

SSRN Journal

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“…Indeed, credit rationing would impose an upper limit on the value of an indifference point; qualitatively it would not change our conclusions, however. Also, for a sample of Italian manufacturing firms, Piga and Atzeni [41] find that credit constraints are negligible for R&D intensive firms. And Bond et al [42] find no significant relationship between the level of R&D investments and cash flow for German and UK firms, while Harhoff [43] finds a weak but statistically significant relationship for both small and large German firms.…”

Section: Partial Collusionmentioning

confidence: 98%

Research and Development Cooperatives and Market Collusion: A Global Dynamic Approach

Hinloopen

Smrkolj

Wagener

2017

J Optim Theory Appl

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We present a continuous-time generalization of the seminal research and development model of d'Aspremont and Jacquemin (Am Econ Rev 78(5): [1133][1134][1135][1136][1137] 1988) to examine the trade-off between the benefits of allowing firms to cooperate in research and the corresponding increased potential for product market collusion. We show the existence of a solution to the optimal investment problem using a combination of results from viscosity theory and the theory of planar dynamical systems. In particular, we show that there is a critical level of marginal cost at which firms are indifferent between doing nothing and starting to develop the technology. We find that colluding firms develop further a wider range of initial technologies, pursue innovations more quickly, and are less likely to abandon a technology. Product market collusion could thus yield higher total surplus.

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“…During recent years, the access to new datasets on firms' financial sources facilitates applying direct methods to observe the presence of financial restrictions at the firm level (Czarnitzki, 2006;Czarnitzki and Hottenrott, 2009;Piga and Atzeni, 2007). In addition, the increased access to datasets from some countries with harmonized surveys on innovation activities at the firm level has facilitated the identification of potentially financially constrained firms (Canepa and Stoneman, 2002;Savignac, 2008).…”

Section: Empirical Evidencementioning

confidence: 99%

Financial constraints and the failure of innovation projects

García‐Quevedo

Segarra‐Blasco

Teruel

2018

Technological Forecasting and Social Change

138

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Abstract:Theoretical and empirical approaches have stressed the existence of financial constraints in firms' innovative activities. Although a large number of innovation projects are abandoned before their completion, the empirical evidence has focused on the determinants of innovation while failed projects have received little attention. This paper analyses the role of financial obstacles on the likelihood of abandoning an innovation project by using panel data of potential innovative Spanish firms for the period 2005-2013. Our analysis differentiates between internal and external barriers on the probability of abandoning a project and we examine whether the effects are different depending on the stage of the innovation process. Controlling for potential endogeneity, we use a bivariate probit model to take into account the simultaneity of financial constraints and the decision to abandon an innovation project. Our results show that financial constraints most affect the probability of abandoning an innovation project during the concept stage.

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R&D INVESTMENT, CREDIT RATIONING AND SAMPLE SELECTION

Cited by 70 publications

References 39 publications

Innovative Capability and Financing Constraints for Innovation More Money, More Innovation?

Innovative Capability and Financing Constraints for Innovation More Money, More Innovation?

Research and Development Cooperatives and Market Collusion: A Global Dynamic Approach

Financial constraints and the failure of innovation projects

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