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Financial Constraints: Routine Versus Cutting Edge R&D Investment

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  • Binz, Hanna L.
  • Czarnitzki, Dirk

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

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 08-005.

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Date of creation: 2008
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Handle: RePEc:zbw:zewdip:7016

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Keywords: R&D; Financial Constraints; Panel Data;

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Cited by:
  1. Hottenrott, Hanna & Peters, Bettina, 2012. "Innovative capability and financing constraints for innovation: More money, more innovation?," ZEW Discussion Papers 09-081 [rev.2], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Czarnitzki, Dirk & Lopes-Bento, Cindy, 2013. "Value for money? New microeconometric evidence on public R&D grants in Flanders," Research Policy, Elsevier, vol. 42(1), pages 76-89.
  3. Czarnitzki, Dirk & Hall, Bronwyn H. & Hottenrott, Hanna, 2014. "Patents as quality signals? The implications for financing constraints on R&D," ZEW Discussion Papers 14-023, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. 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.
  5. Hottenrott, Hanna & Lopes-Bento, Cindy, 2013. "(International) R&D collaboration and SMEs: The effectiveness of targeted public R&D support schemes," DICE Discussion Papers 121, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  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. Georg Paula, 2010. "Financing Conditions, the Concept of Innovation Capacity and the Innovative Activity of Firms," CESifo Working Paper Series 3296, CESifo Group Munich.
  8. 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.
  9. Filipe Silva & Carlos Carreira, 2012. "Measuring Firms' Financial Constraints: A Rough Guide," Notas Económicas, Faculdade de Economia, Universidade de Coimbra, issue 36, pages 23-46, December.

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