Microeconometric evidence of financing frictions and innovative activity - a revision

A.K. Tiwari, P. Mohnen, F.C. Palm, S. Schim van der Loeff

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Abstract

Using Dutch data we empirically investigate how financing and innovation vary across firm characteristics. We find that when firms face financial constraints, debt financing and innovation choices are not independent of firm characteristics, and R&D slows down. In the absence of financial constraints, however, as they raise debt, firms become less inclined to innovate and the change in the propensity to innovate no longer varies with firm characteristics. We find that financing constraints faced, propensity to innovate, and R&D intensity are not uniform across firm characteristics. A new "Control Function" estimator to account for heterogeneity and endogeneity has been developed.
Original languageEnglish
Place of PublicationMaastricht
PublisherUNU-MERIT, Maastricht Economic and Social Research and Training Centre on Innovation and Technology
Number of pages37
Publication statusPublished - 1 Jan 2013

Publication series

SeriesUNU-MERIT Working Papers
Number027

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