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Financial Constraints, Innovation Performance and Sectoral Disaggregation

  • Georgios Efthyvoulou

    ()

    (Department of Economics, University of Sheffield)

  • Priit Vahter

    ()

    (Faculty of Economics and Business Administration, University of Tartu, Estonia)

How do the effects of financial constraints on innovation performance vary by sector and firm characteristics? This paper uses innovation survey data from eleven European countries to examine the heterogeneity of these effects. So far, there has been a lack of cross-country micro-level studies exploring the effects of financial constraints on innovation performance in Western Europe and only little research about the variability of such effects between the broad sectors of production and services. Our results suggest that the impact of direct measures of financial barriers differs in production and service sectors, and also by the firm's export orientation. In particular, financial constraints appear to have more pronounced negative effects in the production sector than in the service sector. Among different types of firms, the response to financial constraints seems to be stronger for non-exporters.

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Paper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2012030.

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Length: 28 pages
Date of creation: Dec 2012
Date of revision:
Handle: RePEc:shf:wpaper:2012030
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