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The determinants of YIc's R&D activity

  • José García-Quevedo

    (Barcelona Institute of Economics - University of Barcelona, Barcelona)

  • Gabriele Pellegrino

    (Barcelona Institute of Economics - University of Barcelona, Barcelona; Università Cattolica del Sacro Cuore, Piacenza and Milano)

  • Marco Vivarelli

    (Università Cattolica del Sacro Cuore, Piacenza and Milano; IZA, Bonn; SPRU, University of Sussex, Brighton)

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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File URL: http://www.pcb.ub.edu/xreap/aplicacio/fitxers/XREAP2011-20.pdf
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File URL: http://www.pcb.ub.edu/xreap/aplicacio/fitxers/XREAP2011-20.pdf
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Paper provided by Xarxa de Referència en Economia Aplicada (XREAP) in its series Working Papers with number XREAP2011-20.

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Length: 45 pages
Date of creation: Dec 2011
Date of revision: Dec 2011
Handle: RePEc:xrp:wpaper:xreap2011-20
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