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Is money all? Financing versus knowledge and demand constraints to innovation

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  • Gabriele Pellegrino

    ()
    (University of Barcelona & IEB)

  • Mark J. Maria Savona

    ()
    (University of Sussex)

Abstract

The paper adds to the scattered empirical evidence on the role of obstacles to innovation in a three-fold way. First, we correct for the usual sample selection bias by filtering out firms not interested in innovation from ‘potential innovators’. Second, we assess what mostly affects firms’ propensity to realize innovative outputs. Third, we do so in a panel framework by using an unbalanced panel of UK firm for the period 2002 - 2010. We find that demand- and market-related factors are as important as financing conditions in determining firms’ innovation failures. This evidence puts much of the latest hype on finance in perspective.

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Bibliographic Info

Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2013/21.

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Length: 38 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:ieb:wpaper:2013/6/doc2013-21

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Keywords: Barriers to innovation; innovative firms; potential innovators; failed innovators; panel data;

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References

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  1. Pierre Mohnen & Lars-Hendrik Röller, 2000. "Complementarities in Innovation Policy," CIG Working Papers, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) FS IV 00-18, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  2. D’Este, Pablo & Iammarino, Simona & Savona, Maria & von Tunzelmann, Nick, 2012. "What hampers innovation? Revealed barriers versus deterring barriers," Research Policy, Elsevier, Elsevier, vol. 41(2), pages 482-488.
  3. Hottenrott, Hanna & Peters, Bettina, 2012. "Innovative capability and financing constraints for innovation: More money, more innovation?," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 09-081 [rev.2], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Mariacristina Piva & Marco Vivarelli, 2007. "Is demand-pulled innovation equally important in different groups of firms?," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 31(5), pages 691-710, September.
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  8. Alessandra Canepa & Paul Stoneman, 2008. "Financial constraints to innovation in the UK: evidence from CIS2 and CIS3," Oxford Economic Papers, Oxford University Press, vol. 60(4), pages 711-730, October.
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  12. Pierre Blanchard & Jean Pierre Huiban & Antonio Musolesi & Patrick Sevestre, 2013. "Where there is a will, there is a way? Assessing the impact of obstacles to innovation," Working Papers, Institut National de la Recherche Agronomique, France 172155, Institut National de la Recherche Agronomique, France.
  13. Agustí Segarra-Blasco & José García-Quevedo & Mercedes Teruel-Carrizosa, 2007. "Barriers to innovation and public policy in Catalonia," Working Papers, Institut d'Economia de Barcelona (IEB) 2007/6, Institut d'Economia de Barcelona (IEB).
  14. Simona Iammarino & Francesca Sanna-Randaccio & Maria Savona, 2007. "The perception of obstacles to innovation. Multinational and domestic firms in Italy," Working Papers of BETA 2007-12, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  15. Jaeyong Song & Paul Almeida & Geraldine Wu, 2003. "Learning--by--Hiring: When Is Mobility More Likely to Facilitate Interfirm Knowledge Transfer?," Management Science, INFORMS, INFORMS, vol. 49(4), pages 351-365, April.
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  17. Galia, Fabrice & Legros, Diego, 2004. "Complementarities between obstacles to innovation: evidence from France," Research Policy, Elsevier, Elsevier, vol. 33(8), pages 1185-1199, October.
  18. Maria Luisa Mancusi & Andrea Vezzulli, 2010. "R&D, Innovation and Liquidity Constraints," KITeS Working Papers, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy 030, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised May 2010.
  19. Pablo D'Este & Francesco Rentocchini & Jaider Manuel Vega Jurado, 2010. "Lowering barriers to engage in innovation: evidence from the Spanish innovation survey," Openloc Working Papers, Public policies and local development 1020, Public policies and local development.
  20. Frederique Savignac, 2008. "Impact Of Financial Constraints On Innovation: What Can Be Learned From A Direct Measure?," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 17(6), pages 553-569.
  21. Dominique Tourigny & Can Le, 2004. "Impediments to innovation faced by Canadian manufacturing firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 13(3), pages 217-250.
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Citations

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Cited by:
  1. José García-Quevedo & Gabriele Pellegrino & Maria Savona, 2014. "Reviving demand-pull perspectives: The effect of demand uncertainty and stagnancy on R&D strategy," SPRU Working Paper Series, SPRU - Science and Technology Policy Research, University of Sussex 2014-09, SPRU - Science and Technology Policy Research, University of Sussex.
  2. Giovanni Marin & Alberto Marzucchi & Roberto Zoboli, 2014. "SMEs and Barriers to Eco-Innovation in EU: A Diverse Palette of Greens," SEEDS Working Papers, SEEDS, Sustainability Environmental Economics and Dynamics Studies 0614, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Apr 2014.
  3. Heike Belitz & Anna Lejpras, 2014. "Financing Patterns of Innovative SMEs and the Perception of Innovation Barriers in Germany," Discussion Papers of DIW Berlin 1353, DIW Berlin, German Institute for Economic Research.
  4. Vásquez-Urriago, Angela & Barge-Gil, Andrés & Modrego, Aurelia, 2014. "Which firms benefit more from being located in a Science and Technology Park? Empirical evidence for Spain," MPRA Paper 55130, University Library of Munich, Germany.

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