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The Impact of Cash-Flow and the Main Components of the Capital Structure on Innovative Performances of European Firms

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  • Bernardina Algieri
  • Antonio Aquino
  • Marianna Succurro

Abstract

This study aims at investigating the impact of cash-flow, the main components of the capital structure, and R&D on innovative performances of firms, for seven EU countries. The analysis is carried out on data taken from the EU-Efige Survey, enriched with accounting data retrieved from the Amadeus Database (Bureau Van Dijk). We consider three measures of innovative performance: product innovations, process innovations and patents. The capital structure of the firms is evaluated through the short-term debt ratio, the long-term debt ratio and the equity to total assets ratio. We also include as explanatory variables in the econometric analysis R&D and a set of other control variables commonly employed in the empirical literature as determinants of firms’ innovative performance. The results reveal that internal financial resources (cash-flows) and R&D have the greatest importance for innovative performances; the availability of long-term bank loans, a significant export propensity and a greater firm size facilitate and stimulate firms to introduce new products and production processes. Some policy implications conclude the study.

Suggested Citation

  • Bernardina Algieri & Antonio Aquino & Marianna Succurro, 2020. "The Impact of Cash-Flow and the Main Components of the Capital Structure on Innovative Performances of European Firms," Review of Economics and Institutions, Università di Perugia, vol. 11(1-2).
    • Handle: RePEc:pia:review:v:11:y:2020:i:1-2:n:2
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    More about this item

    Keywords

    : Innovation; Patent; R&D; Capital structure; Probit model;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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