Innovative capability and financing constraints for innovation: More money, more innovation?

Hanna Hottenrott and Bettina Peters ()

ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: This study presents a novel empirical approach to identify financing constraints for innovation based on the concept of an ideal test (Hall 2008). Firms were offered a hypothetical payment and were asked to choose between alternatives of use. If they selected additional innovation projects, they must have had some unexploited investment opportunities that were not profitable using more costly external finance. We attribute constraints for innovation not only to lacking financing, but also to firms' innovative capability. Econometric results show that financial constraints do not depend on the availability of internal funds per se, but that they are driven by innovative capability.

Keywords: innovation; financing constraints; innovative capability; multivariate probit models (search for similar items in EconPapers)
JEL-codes: C35 O31 O32 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-cse, nep-ent, nep-ino, nep-knm and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (189)

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Related works:
Journal Article: Innovative Capability and Financing Constraints for Innovation: More Money, More Innovation? (2012)
Working Paper: Innovative capability and financing constraints for innovation: More money, more innovation? (2011)
Working Paper: Innovative capability and financing constraints for innovation: More money, more innovation? (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:09081r2

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