Innovation and the Financial Performance of Firms during the Great Recession and Recovery Period

Nelson Gomes () and Nuno Gonçalves ()
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Nelson Gomes: Univ Coimbra, CeBER, Faculty of Economics
Nuno Gonçalves: Univ Coimbra, Faculty of Economics

Notas Económicas, 2022, issue 55, 115-131

Abstract: This study analyzes the relationship between innovation and financial constraints. To this end, a database extracted from the Community Innovation Survey (CIS) and the System of Business Accounts (SCIE) was used. The sample consisted of 24,679 active companies operating in Portugal in the manufacturing and service industry between 2008 and 2016. A Recursive Bivariate Probit Model (RPBM) was used for making estimates. When analyzing the relationship between innovation and financial constraints, the results reveal a negative relationship between the two, confirming that firms that are financially constrained are more limited in their investments in R&D, and innovation is less accessible to them. The severity of the effects of financial constraints is heterogeneous across economic activities, strongly affecting innovative industries, while service industries appear to be the least affected. It was also observed that larger companies are better able to innovate. There was a positive relationship between innovation and the variables sales and exports, indicating that innovation will positively affect the financial results of companies.

Keywords: Innovation; R&D investment; financial constraints; Portugal. (search for similar items in EconPapers)
JEL-codes: D92 G32 L00 L20 O30 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:gmf:journl:y:2022:i:55:p:115:131

DOI: 10.14195/2183-203X_55_5

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