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Foreign Capital, Credit Constraints and Continuity of Firms’ R&D

Author

Listed:
  • Pilar Beneito

    (Departamento de Análisis Económico. Facultad de Economia, Avda-Tarongers, s/n, 46022- Valencia, SPAIN.)

  • Maria Engracia Rochina-Barrachina

    (Departamento de Estructura Económica. Facultad de Economia, Avda-Tarongers, s/n, 46022- Valencia, SPAIN.)

  • Amparo Sanchis

    (Departamento de Estructura Económica. Facultad de Economia, Avda-Tarongers, s/n, 46022- Valencia, SPAIN.)

Abstract

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. These results are robust to positive selection of target firms by foreign companies and to firms’ fixed effects.

Suggested Citation

  • Pilar Beneito & Maria Engracia Rochina-Barrachina & Amparo Sanchis, 2015. "Foreign Capital, Credit Constraints and Continuity of Firms’ R&D," Working Papers 1506, Department of Applied Economics II, Universidad de Valencia.
  • Handle: RePEc:eec:wpaper:1506
    as

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    References listed on IDEAS

    as
    1. 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.
    2. Pol Antràs & Mihir A. Desai & C. Fritz Foley, 2009. "Multinational Firms, FDI Flows, and Imperfect Capital Markets," The Quarterly Journal of Economics, Oxford University Press, vol. 124(3), pages 1171-1219.
    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. 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.
    5. 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.
    6. 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).
    7. Richard Blundell & Rachel Griffith & John van Reenen, 1999. "Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms," Review of Economic Studies, Oxford University Press, vol. 66(3), pages 529-554.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    foreign capital; credit constraints; R&D investment; interruptions in R&D.;

    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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