Access to finance and innovative activity of EU firms: A cluster analysis

Annalisa Ferrando and Senad Lekpek

No 2018/02, EIB Working Papers from European Investment Bank (EIB)

Abstract: The way firms finance their investments can potentially explain the heterogeneity of firms in terms of their innovation. We use a novel firm-level survey of the European Investment Bank (EIBIS) which provides information about a wide range of financing sources that firms use to fund their investment activities. The aforementioned survey also reveals a firms' degree of innovativeness. By applying a cluster analysis to group firms using information on their financing decisions, we investigate the link between finance and innovation of EU firms. We identify seven financing clusters to show that the degree of innovativeness (defined in terms of R&D or software investment, R&D and software turnover ratios, and the introduction of new products) increases with the diversification of financial instruments. Firms that use several financing instruments are more likely to invest in R&D and software activities and develop new products compared to firms that use a more limited number of financing instruments.

Keywords: innovation; R&D; internal and external finance; cluster analysis (search for similar items in EconPapers)
JEL-codes: D22 G32 O31 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-cfn, nep-cse, nep-ino, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:eibwps:201802

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