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The determinants of YIc's R&D activity

Jose Garcia-Quevedo (), Gabriele Pellegrino () and Marco Vivarelli ()

No XREAP2011-20, Working Papers from Xarxa de Referència en Economia Aplicada (XREAP)

Abstract: 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.

Keywords: R&D; innovation; Young Innovative Companies (YICs); dynamic type-2 tobit estimator. (search for similar items in EconPapers)
JEL-codes: O31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent, nep-ino and nep-sbm
Date: 2011-12, Revised 2011-12
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http://www.pcb.ub.edu/xreap/aplicacio/fitxers/XREAP2011-20.pdf First version, 2011 (application/pdf)
http://www.pcb.ub.edu/xreap/aplicacio/fitxers/XREAP2011-20.pdf Revised version, 2011 (application/pdf)

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