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Foreign capital, credit constraints and continuity of firms' R&D

Author

Listed:
  • P. Beneito
  • M. E. Rochina-Barrachina
  • A. Sanchis

Abstract

In this article, we investigate the role of foreign capital participation as a means for firms to overcome the obstacle posed by credit constraints to sustain R&D investments. Using data for Spanish manufacturing firms in the period 1990-2006, we show that firms with foreign capital are significantly less likely to stop already initiated R&D projects and also more likely to sustain R&D investment when facing credit constraints. Our results are robust to positive selection into foreign capital participation, which we control through a set of variables chosen from a propensity score estimation, and to firms' fixed-effects.

Suggested Citation

  • P. Beneito & M. E. Rochina-Barrachina & A. Sanchis, 2016. "Foreign capital, credit constraints and continuity of firms' R&D," Applied Economics Letters, Taylor & Francis Journals, vol. 23(3), pages 157-161, February.
    • Handle: RePEc:taf:apeclt:v:23:y:2016:i:3:p:157-161
    DOI: 10.1080/13504851.2015.1061635
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    References listed on IDEAS

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    1. Pol Antràs & Mihir A. Desai & C. Fritz Foley, 2009. "Multinational Firms, FDI Flows, and Imperfect Capital Markets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(3), pages 1171-1219.
    2. Paz Coscollá-Girona & Pilar Beneito López & Amparo Sanchis Llopis & María Engracia Rochina Barrachina, 2011. "Competitive pressure determinants and innovation at the firm level," Working Papers. Serie EC 2011-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    3. Maria Guadalupe & Olga Kuzmina & Catherine Thomas, 2012. "Innovation and Foreign Ownership," American Economic Review, American Economic Association, vol. 102(7), pages 3594-3627, December.
    4. Philippe Aghion & Philippe Askenazy & Nicolas Berman & Gilbert Cette & Laurent Eymard, 2012. "Credit Constraints And The Cyclicality Of R&D Investment: Evidence From France," Journal of the European Economic Association, European Economic Association, vol. 10(5), pages 1001-1024, October.
    5. Kalina Manova & Shang-Jin Wei & Zhiwei Zhang, 2015. "Firm Exports and Multinational Activity Under Credit Constraints," The Review of Economics and Statistics, MIT Press, vol. 97(3), pages 574-588, July.
    6. Beneito, Pilar & Rochina-Barrachina, María Engracia & Sanchis, Amparo, 2015. "The path of R&D efficiency over time," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 57-69.
    7. Aghion, P. & Askenazy, P. & Berman, N. & Cette, G. & Eymard, L., 2008. "Credit Constraints and the Cyclicality of R&D Investment: Evidence from France," Working papers 198, Banque de France.
    8. Mihir A. Desai & C. Fritz Foley & James R. Hines, 2004. "A Multinational Perspective on Capital Structure Choice and Internal Capital Markets," Journal of Finance, American Finance Association, vol. 59(6), pages 2451-2487, December.
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    Cited by:

    1. Quan Tran & Anh‐Tuan Doan & Thao Tran, 2021. "Small and medium enterprises' credit access, ownership structure and job development," Australian Economic Papers, Wiley Blackwell, vol. 60(4), pages 710-735, December.
    2. Juan A. Máñez Castillejo & Oscar Vicente-Chirivella, 2019. "Exports of Spanish manufacturing firms and financial constraints," Working Papers 1921, Department of Applied Economics II, Universidad de Valencia.
    3. Piao, Zhefan & Miao, Binbin & Zheng, Zihan & Xu, Feng, 2022. "Technological innovation efficiency and its impact factors: An investigation of China's listed energy companies," Energy Economics, Elsevier, vol. 112(C).

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    More about this item

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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