Abstract
Original language | English |
---|---|
Pages (from-to) | 197-217 |
Number of pages | 21 |
Journal | Economics of Innovation and New Technology |
Volume | 25 |
Issue number | 3 |
DOIs | |
Publication status | Published - 2016 |
JEL classifications
- o30 - "Technological Change; Research and Development; Intellectual Property Rights: General"
- o34 - Intellectual Property Rights
Keywords
- financial constraints
- innovation policy
- patents
- quality signal
- research and development
- CAPITAL-MARKET IMPERFECTIONS
- RIGHTS
- START-UPS
- DEVELOPMENT INVESTMENT
- INNOVATION
- CASH FLOW SENSITIVITIES
- SMALL FIRMS
- EUROPEAN PATENTS
- INTELLECTUAL PROPERTY
- AGENCY COSTS
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In: Economics of Innovation and New Technology, Vol. 25, No. 3, 2016, p. 197-217.
Research output: Contribution to journal › Article › Academic › peer-review
TY - JOUR
T1 - Patents as quality signals?
T2 - The implications for financing constraints on R&D
AU - Hottenrott, H.
AU - Hall, B.H.
AU - Czarnitzki, D.
N1 - Export Date: 8 December 2016 Correspondence Address: Hottenrott, H.; Düsseldorf Institute for Competition Economics (DICE)Germany; email: hottenrott@dice.hhu.de References: Anton, J., Yao, D., The Sale of Ideas: Strategic Disclosure, Property Rights, and Contracting (2002) Review of Economic Studies, 69 (3), pp. 513-531; Arora, A., Fosfuri, A., Gambardella, A., (2001) Markets for Technology: The Economics of Innovation and Corporate Strategy, , Cambridge, MA: MIT Press; Arrow, K.J., Economic Welfare and the Allocation of Resources for Invention (1962) The Rate and Direction of Inventive Activity, pp. 609-626. , Nelson R., (ed), Princeton, NJ: Princeton University Press; Baum, J.A., Silverman, B.S., Picking Winners or Building Them? 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PY - 2016
Y1 - 2016
N2 - Information about the success of a new technology is usually held asymmetrically between the research and development (R&D)-performing firm and potential lenders and investors. This raises the cost of capital for financing R&D externally, resulting in financing constraints on R&D, especially for firms with limited internal resources. Previous literature provided evidence for start-up firms on the role of patents as signals to investors, in particular to Venture Capitalists. This study adds to previous insights by studying the effects of firms’ patenting activity on the degree of financing constraints on R&D for a panel of established firms. The results show that patents do indeed attenuate financing constraints for small firms where information asymmetries may be particularly high and collateral value is low. Larger firms are not only less subject to financing constraints, but also do not seem to benefit from a patent quality signal. © 2015 Taylor & Francis.
AB - Information about the success of a new technology is usually held asymmetrically between the research and development (R&D)-performing firm and potential lenders and investors. This raises the cost of capital for financing R&D externally, resulting in financing constraints on R&D, especially for firms with limited internal resources. Previous literature provided evidence for start-up firms on the role of patents as signals to investors, in particular to Venture Capitalists. This study adds to previous insights by studying the effects of firms’ patenting activity on the degree of financing constraints on R&D for a panel of established firms. The results show that patents do indeed attenuate financing constraints for small firms where information asymmetries may be particularly high and collateral value is low. Larger firms are not only less subject to financing constraints, but also do not seem to benefit from a patent quality signal. © 2015 Taylor & Francis.
KW - financial constraints
KW - innovation policy
KW - patents
KW - quality signal
KW - research and development
KW - CAPITAL-MARKET IMPERFECTIONS
KW - RIGHTS
KW - START-UPS
KW - DEVELOPMENT INVESTMENT
KW - INNOVATION
KW - CASH FLOW SENSITIVITIES
KW - SMALL FIRMS
KW - EUROPEAN PATENTS
KW - INTELLECTUAL PROPERTY
KW - AGENCY COSTS
U2 - 10.1080/10438599.2015.1076200
DO - 10.1080/10438599.2015.1076200
M3 - Article
SN - 1043-8599
VL - 25
SP - 197
EP - 217
JO - Economics of Innovation and New Technology
JF - Economics of Innovation and New Technology
IS - 3
ER -