Advanced Search

The Financing of Research and Development

Contents:

Author Info

  • Bronwyn H. Hall

Abstract

Evidence on the 'funding gap' for R&D is surveyed. The focus is on financial-market reasons for under-investment in R&D that persist even in the absence of externality induced under-investment. The conclusions are that (i) small and new innovative firms experience high costs of capital that are only partly mitigated by the presence of venture capital; (ii) evidence for high costs of R&D capital for large firms is mixed, although these firms do prefer internal funds for financing these investments; (iii) there are limits to venture capital as a solution to the funding gap, especially in countries where public equity markets are not highly developed; and (iv) further study of governmental seed capital and subsidy programmes using quasi-experimental methods is warranted. Copyright 2002, Oxford University Press.

Download Info

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Review of Economic Policy.

Volume (Year): 18 (2002)
Issue (Month): 1 (Spring)
Pages: 35-51
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:oup:oxford:v:18:y:2002:i:1:p:35-51

Contact details of provider:
Web page: http://oxrep.oupjournals.org/

For corrections or technical questions regarding this item, or to correct its listing, contact: (Oxford University Press) or (Christopher F. Baum).

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  2. Bronwyn H. Hall, Jacques Mairesse, Lee Branstetter, and Bruno Crepon., 1998. "Does Cash Flow Cause Investment and R& D: An Exploration Using Panel Data for French, Japanese, and United States Scientific Firms," Economics Working Papers 98-260, University of California at Berkeley.
  3. Klette, Tor Jakob & Moen, Jarle & Griliches, Zvi, 2000. "Do subsidies to commercial R&D reduce market failures? Microeconometric evaluation studies1," Research Policy, Elsevier, vol. 29(4-5), pages 471-495, April.
  4. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  5. Josh Lerner, 1996. "The Government as Venture Capitalist: The Long-Run Effects of the SBIR Program," NBER Working Papers 5753, National Bureau of Economic Research, Inc.
  6. Bronwyn H. Hall & Jacques Mairesse & Benoit Mulkay, 1998. "Firm-level investment in France an the United States: an exploration of what we have learned in twenty years," IFS Working Papers W98/10, Institute for Fiscal Studies.
  7. Paul A. David & Bronwyn H. Hall & Andrew A. Toole, 1999. "Is Public R&D a Complement or Substitute for Private R&D? A Review of the Econometric Evidence," Working Papers 99023, Stanford University, Department of Economics.
  8. Bharat N. Anand & Alexander Galetovic, 2000. "Weak Property Rights and Holdup in R&D," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 9(4), pages 615-642, December.
  9. Black, Bernard S. & Gilson, Ronald J., 1998. "Venture capital and the structure of capital markets: banks versus stock markets," Journal of Financial Economics, Elsevier, vol. 47(3), pages 243-277, March.
  10. Opler, Tim C & Titman, Sheridan, 1994. " Financial Distress and Corporate Performance," Journal of Finance, American Finance Association, vol. 49(3), pages 1015-40, July.
  11. Williamson, Oliver E, 1988. " Corporate Finance and Corporate Governance," Journal of Finance, American Finance Association, vol. 43(3), pages 567-91, July.
  12. Bronwyn H. Hall & Zvi Griliches & Jerry A. Hausman, 1986. "Patents and R&D: Is There A Lag?," NBER Working Papers 1454, National Bureau of Economic Research, Inc.
  13. Lach, Saul & Schankerman, Mark, 1989. "Dynamics of R&D and Investment in the Scientific Sector," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 880-904, August.
  14. Alam, Pervaiz & Walton, Karen Schuele, 1995. "Information Asymmetry and Valuation Effects of Debt Financing," The Financial Review, Eastern Finance Association, vol. 30(2), pages 289-311, May.
  15. Mansfield, Edwin & Schwartz, Mark & Wagner, Samuel, 1981. "Imitation Costs and Patents: An Empirical Study," Economic Journal, Royal Economic Society, vol. 91(364), pages 907-18, December.
  16. Alan J. Auerbach, 1984. "Taxes, Firm Financial Policy and the Cost of Capital: An Empirical Analysis," NBER Working Papers 0955, National Bureau of Economic Research, Inc.
  17. Carlin, Wendy & Mayer, Colin, 1999. "Finance, Investment and Growth," CEPR Discussion Papers 2233, C.E.P.R. Discussion Papers.
  18. Ward Brown, 1997. "R&D Intensity and Finance: Are Innovative Firms Financially Constrained?," FMG Discussion Papers dp271, Financial Markets Group.
  19. Aghion, Philippe & Bolton, Patrick, 1992. "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies, Wiley Blackwell, vol. 59(3), pages 473-94, July.
  20. Steven Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1988. "Financing Constraints and Corporate Investment," NBER Working Papers 2387, National Bureau of Economic Research, Inc.
  21. Griliches, Zvi, 1992. " The Search for R&D Spillovers," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages S29-47, Supplemen.
  22. Samuel Kortum & Josh Lerner, 2000. "Assessing the Contribution of Venture Capital to Innovation," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 674-692, Winter.
  23. Lerner, Josh & Shane, Hilary & Tsai, Alexander, 2003. "Do equity financing cycles matter? evidence from biotechnology alliances," Journal of Financial Economics, Elsevier, vol. 67(3), pages 411-446, March.
  24. Lerner, Joshua, 1998. ""Angel" financing and public policy: An overview," Journal of Banking & Finance, Elsevier, vol. 22(6-8), pages 773-783, August.
  25. Stephen BOND & Dietmar HARHOFF & John VAN REENEN, 2005. "Investment, R&D and Financial Constraints in Britain and Germany," Annales d'Economie et de Statistique, ENSAE, issue 79-80, pages 433-460.
  26. Yasushi Hamao & Frank Packer & Jay R. Ritter, 1998. "Institutional affiliation and the role of venture capital: evidence from initial public offerings in Japan," Staff Reports 52, Federal Reserve Bank of New York.
  27. Steven N. Kaplan & Per Stromberg, 2000. "Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital Contracts," NBER Working Papers 7660, National Bureau of Economic Research, Inc.
  28. Zantout, Zaher Z, 1997. "A Test of the Debt-Monitoring Hypothesis: The Case of Corporate R&D Expenditures," The Financial Review, Eastern Finance Association, vol. 32(1), pages 21-48, February.
  29. Dietmar HARHOFF, 1998. "Are there Financing Constraints for R&D and Investment in German Manufacturing Firms," Annales d'Economie et de Statistique, ENSAE, issue 49-50, pages 421-456.
  30. F. M. Scherer, 1998. "The Size Distribution of Profits from Innovation," Annales d'Economie et de Statistique, ENSAE, issue 49-50, pages 495-516.
  31. Francis, Jennifer & Smith, Abbie, 1995. "Agency costs and innovation some empirical evidence," Journal of Accounting and Economics, Elsevier, vol. 19(2-3), pages 383-409, April.
  32. Harhoff, Dietmar, 1996. "Are there financing constraints for R&D and investment in German manufacturing firms?," ZEW Discussion Papers 96-28, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  33. Dewatripont, Mathias & Tirole, Jean, 1994. "A Theory of Debt and Equity: Diversity of Securities and Manager-Shareholder Congruence," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 1027-54, November.
  34. Bhattacharya, Sudipto & Ritter, Jay R, 1983. "Innovation and Communication: Signalling with Partial Disclosure," Review of Economic Studies, Wiley Blackwell, vol. 50(2), pages 331-46, April.
  35. Dirk Engel, 2003. "Höheres Beschäftigungswachstum durch Venture Capital?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 223(1), pages 1-22.
  36. Merton H. Miller & Franco Modigliani, 1961. "Dividend Policy, Growth, and the Valuation of Shares," The Journal of Business, University of Chicago Press, vol. 34, pages 411.
  37. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
  38. Bhagat, Sanjai & Welch, Ivo, 1995. "Corporate research & development investments international comparisons," Journal of Accounting and Economics, Elsevier, vol. 19(2-3), pages 443-470, April.
  39. Michael J. Alderson & Brian L. Betker, 1996. "Liquidation Costs and Accounting Data," Financial Management, Financial Management Association, vol. 25(2), Summer.
  40. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
  41. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August.
  42. Paul A. Gompers & Josh Lerner, 1999. "What Drives Venture Capital Fundraising?," NBER Working Papers 6906, National Bureau of Economic Research, Inc.
  43. Chung, Kee H & Wright, Peter, 1998. " Corporate Policy and Market Value: A q-Theory Approach," Review of Quantitative Finance and Accounting, Springer, vol. 11(3), pages 293-310, November.
  44. Hall, Bronwyn & Van Reenen, John, 2000. "How effective are fiscal incentives for R&D? A review of the evidence," Research Policy, Elsevier, vol. 29(4-5), pages 449-469, April.
  45. Anuradha Nagarajan & Sumit K. Majumdar, 1997. "The Impact of Changing Stock Ownership Patterns in the United States : Theoretical Implications and Some Evidence," Revue d'Économie Industrielle, Programme National Persée, vol. 82(1), pages 39-54.
  46. Philippe Aghion & Peter Howitt, 1997. "Endogenous Growth Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011662.
  47. Asher Blass & Oved Yosha, 2003. "Financing R&D in mature companies: An empirical analysis," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 12(5), pages 425-447.
  48. Richard R. Nelson, 1959. "The Simple Economics of Basic Scientific Research," Journal of Political Economy, University of Chicago Press, vol. 67, pages 297.
  49. Johnson, Mark S & Rao, Ramesh P, 1997. "The Impact of Antitakeover Amendments on Corporate Financial Performance," The Financial Review, Eastern Finance Association, vol. 32(4), pages 659-89, November.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:oup:oxford:v:18:y:2002:i:1:p:35-51

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.