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The sensitivity of R&D investments to cash flows: comparing young and old EU and US leading innovators

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  • Michele Cincera
  • Julien Ravet
  • Reinhilde Veugelers

Abstract

Using firm-level information on the world leading R&D investors and employing a system generalised method of moment estimation, this paper investigates how sensitive R&D investments are to cash-flow movements, which would be suggestive of financial constraints. The analysis confirms that over the last decade, the R&D investments of younger aged leading innovators appear to be more sensitive to cash flows compared to their older counterparts and that this holds particularly for EU younger aged leading innovators compared to their US counterparts, particularly in medium- and high-tech sectors.

Suggested Citation

  • Michele Cincera & Julien Ravet & Reinhilde Veugelers, 2016. "The sensitivity of R&D investments to cash flows: comparing young and old EU and US leading innovators," ULB Institutional Repository 2013/231082, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:ulb:ulbeco:2013/231082
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    Cited by:

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    2. Pietro Moncada-Paternò-Castello, 2022. "Top R&D investors, structural change and the R&D growth performance of young and old firms," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 1-33, March.
    3. Greta Falavigna & Roberto Ippoliti, 2021. "Financial Constraints and the Sustainability of Dividend Payout Policy," Sustainability, MDPI, vol. 13(11), pages 1-15, June.
    4. Nadine Levratto & Aurelien Quignon, 2021. "Innovation Performance and the Signal Effect: Evidence from a European Program," Working Papers halshs-03466903, HAL.
    5. Yamazaki, Akio, 2022. "Environmental taxes and productivity: Lessons from Canadian manufacturing," Journal of Public Economics, Elsevier, vol. 205(C).
    6. Grazia Cecere & Nicoletta Corrocher & Maria Luisa Mancusi, 2020. "Financial constraints and public funding of eco-innovation: empirical evidence from European SMEs," Small Business Economics, Springer, vol. 54(1), pages 285-302, January.
    7. Hayoung Park & Taewon Kang & Jeong-Dong Lee, 2019. "R&D Dynamics And Firm Growth: The Importance Of R&D Persistency In The Economic Crisis," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 23(05), pages 1-24, June.
    8. Aurélien Quignon & Nadine Levratto, 2021. "Innovation Performance and the Signal Effect: Evidence from a European Program," EconomiX Working Papers 2021-34, University of Paris Nanterre, EconomiX.
    9. Björn Alecke & Timo Mitze & Annekatrin Niebuhr, 2021. "Building a bridge over the valley of death? New pathways for innovation policy in structurally weak regions," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 41(2), pages 185-210, October.
    10. Dai, Xiaoyong & Li, Yanchao & Chen, Kaihua, 2021. "Direct demand-pull and indirect certification effects of public procurement for innovation," Technovation, Elsevier, vol. 101(C).
    11. Sandro Montresor & Antonio Vezzani, 2019. "Financial constraints and intangible investments. Do innovative and non-innovative firms differ?," JRC Working Papers on Corporate R&D and Innovation 2019-07, Joint Research Centre.
    12. Mina, Andrea & Minin, Alberto Di & Martelli, Irene & Testa, Giuseppina & Santoleri, Pietro, 2021. "Public funding of innovation: Exploring applications and allocations of the European SME Instrument," Research Policy, Elsevier, vol. 50(1).
    13. Kang, Taewon & Baek, Chulwoo & Lee, Jeong-Dong, 2017. "The persistency and volatility of the firm R&D investment: Revisited from the perspective of technological capability," Research Policy, Elsevier, vol. 46(9), pages 1570-1579.
    14. Milani, Sahar & Neumann, Rebecca, 2022. "R&D, patents, and financing constraints of the top global innovative firms," Journal of Economic Behavior & Organization, Elsevier, vol. 196(C), pages 546-567.
    15. Pietro Santoleri & Andrea Mina & Alberto Di Minin & Irene Martelli, 2020. "The causal effects of R&D grants: evidence from a regression discontinuity," LEM Papers Series 2020/18, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

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