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Microeconometric evidence of financing frictions and innovative activity - a revision

Author

Listed:
  • Tiwari A.K.
  • Mohnen P.
  • Palm F.C.
  • Schim van der Loeff S.

    (UNU-MERIT)

Abstract

Using Dutch data we empirically investigate how financing and innovation vary across firm characteristics. We find that when firms face financial constraints, debt financing and innovation choices are not independent of firm characteristics, and RD slows down. In the absence of financial constraints, however, as they raise debt, firms become less inclined to innovate and the change in the propensity to innovate no longer varies with firm characteristics. We find that financing constraints faced, propensity to innovate, and RD intensity are not uniform across firm characteristics. A new Control Function estimator to account for heterogeneity and endogeneity has been developed.

Suggested Citation

  • Tiwari A.K. & Mohnen P. & Palm F.C. & Schim van der Loeff S., 2013. "Microeconometric evidence of financing frictions and innovative activity - a revision," MERIT Working Papers 027, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2013027
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    File URL: https://www.merit.unu.edu/publications/wppdf/2013/wp2013-027.pdf
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    References listed on IDEAS

    as
    1. Papke, Leslie E. & Wooldridge, Jeffrey M., 2008. "Panel data methods for fractional response variables with an application to test pass rates," Journal of Econometrics, Elsevier, pages 121-133.
    2. Newey, Whitney K., 1984. "A method of moments interpretation of sequential estimators," Economics Letters, Elsevier, vol. 14(2-3), pages 201-206.
    3. Semykina, Anastasia & Wooldridge, Jeffrey M., 2010. "Estimating panel data models in the presence of endogeneity and selection," Journal of Econometrics, Elsevier, pages 375-380.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Multiple or Simultaneous Equation Models; Corporate Finance and Governance; Technological Change; Research and Development; Intellectual Property Rights;

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General

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