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The determinants of YICs’ R&Dactivity

  • José García-Quevedo

    ()

    (Universitat de Barcelona & IEB)

  • Gabriele Pellegrino

    ()

    (Universitat de Barcelona & IEB)

  • Marco Vivarelli

    ()

    (Università Cattolica, Milano and Piacenza & SPRU-University of Sussex & IZA, Bonn)

This paper examines the determinants of young innovative companies’ (YICs) R&D activities taking into account the autoregressive nature of innovation. Using a large longitudinal dataset comprising Spanish manufacturing firms over the period 1990-2008, we find that previous R&D experience is a fundamental determinant for mature and young firms, albeit to a smaller extent in the case of the YICs, suggesting that their innovation behaviour is less persistent and more erratic. Moreover, our results suggest that firm and market characteristics play a distinct role in boosting the innovation activity of firms of different age. In particular, while market concentration and the degree of product diversification are found to be important in boosting R&D activities in the sub-sample of mature firms only, YICs’ spending on R&D appears to be more sensitive to demand-pull variables, suggesting the presence of credit constraints. These results have been obtained using a recently proposed dynamic type-2 tobit estimator, which accounts for individual effects and efficiently handles the initial conditions problem.

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Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2011/31.

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Length: 36 pages
Date of creation: 2011
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Handle: RePEc:ieb:wpaper:2011/11/doc2011-31
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