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Financial Constraints: Routine Versus Cutting Edge R&D Investment

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  • Dirk Czarnitzki
  • Hanna Hottenrott

Abstract

We analyze financial constraints for R&D, where we account for heterogeneity among investments which has been neglected in previous literature. According to economic theory, investments should be distinguished by their degree of uncertainty, e.g. routine R&D versus cutting-edge R&D. Financial constraints should be more binding for cutting-edge R&D than for routine R&D. Using panel data we find that R&D spending of firms devoting a significant fraction of R&D to cutting-edge projects is curtailed by credit constraints while routine R&D investments are not. This has important policy implications with respect to the distribution of R&D subsidies in the economy. --

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

Volume (Year): 20 (2011)
Issue (Month): 1 (03)
Pages: 121-157

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Handle: RePEc:bla:jemstr:v:20:y:2011:i:1:p:121-157

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Cited by:
  1. LOPES BENTO Cindy & CZARNITZKI Dirk, 2012. "Value for money? New microeconomic evidence on public R&D grants in Flanders," CEPS/INSTEAD Working Paper Series 2012-19, CEPS/INSTEAD.
  2. Hottenrott H. & Czarnitzki D. & Hall B.H., 2014. "Patents as quality signals? The implications for financing constraints on R&D," MERIT Working Papers 013, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  3. Hottenrott, Hanna & Lopes-Bento, Cindy, 2012. "(International) R&D collaboration and SMEs: The effectiveness of targeted public R&D support schemes," ZEW Discussion Papers 12-086, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Czarnitzki, Dirk & Hottenrott, Hanna, 2012. "Collaborative R&D as a strategy to attenuate financing constraints," ZEW Discussion Papers 12-049, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  5. Hottenrott, Hanna & Peters, Bettina, 2009. "Innovative capability and financing constraints for innovation: More money, more innovation?," ZEW Discussion Papers 09-081, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. Bettina Becker, 2013. "The Determinants of R&D Investment: A Survey of the Empirical Research," Discussion Paper Series 2013_09, Department of Economics, Loughborough University, revised Sep 2013.
  7. Czarnitzki, Dirk & Lopes-Bento, Cindy, 2012. "Value for money? New microeconometric evidence on public R&D grants in Flanders," ZEW Discussion Papers 12-034, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Filipe Silva & Carlos Carreira, 2012. "Measuring Firms' Financial Constraints: A Rough Guide," Notas Económicas, Faculdade de Economia, Universidade de Coimbra, Faculdade de Economia, Universidade de Coimbra, issue 36, pages 23-46, December.
  9. Georg Paula, 2010. "Financing Conditions, the Concept of Innovation Capacity and the Innovative Activity of Firms," CESifo Working Paper Series 3296, CESifo Group Munich.

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