Industrial research versus development investment: The implications of financial constraints

Dirk Czarnitzki, Hanna Hottenrott, Susanne Thorwarth

Publikation: Beitrag in FachzeitschriftArtikelBegutachtung

90 Zitate (Scopus)

Abstract

Previous literature provided evidence on financing constraints for investment in research and development (R&D) activities due to capital market imperfections and special features of R&D investments. Moreover, it has been shown that a shift in capital structure towards more debt results in a reduction of R&D investments. This article complements this literature by compartmentalising R&D activities into its components, 'R' and 'D'. In particular, we distinguish research from development as these activities not only differ in their nature but also, to a large extent, take place sequentially. Our results show that 'R' investment is more sensitive to a firms' operating liquidity than 'D' indicating that firms have to rely even more on internal funds for financing their research compared with development activities. Moreover, we find that (basic) research subsidy recipients' investment is less sensitive to internal liquidity.

OriginalspracheEnglisch
Seiten (von - bis)527-544
Seitenumfang18
FachzeitschriftCambridge Journal of Economics
Jahrgang35
Ausgabenummer3
DOIs
PublikationsstatusVeröffentlicht - 1 Mai 2011
Extern publiziertJa

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