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R&D investment and financing constraints of small and medium-sized firms

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  • Dirk Czarnitzki

    ()

  • Hanna Hottenrott

Abstract

This study tests for financial constraints on R&D investment and how they differ from capital investment. To identify constraints in the access to external capital, we employ a credit rating index. Our models show that internal constraints, measured by mark-ups, are more decisive for R&D than for capital investment. For external constraints, we find a monotonic relationship between the level of constriction and firm size for both types of investment. Thus, external constraints turn out to be more binding with decreasing firm size. On the contrary, we do not find such monotonic relationships for internal constraints. Differentiation by firms? age does not support lower constraints for older firms.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s11187-009-9189-3
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Article provided by Springer in its journal Small Business Economics.

Volume (Year): 36 (2011)
Issue (Month): 1 (January)
Pages: 65-83

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Handle: RePEc:kap:sbusec:v:36:y:2011:i:1:p:65-83
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100338

Keywords: Capital investment; Censored regression models; Financial constraints; Panel data; R&D investment; L26; O31; O32;

Other versions of this item:

Find related papers by JEL classification:
  • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
  • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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