Can Trade Credit Maintain Sustainable R&D Investment of SMEs?—Evidence from China

Langzi Chen, Zhihong Chen and Jian Li
Additional contact information
Langzi Chen: School of Management, Nanjing Forest Police College, No. 28, Wenlan Road, Qixia District, Nanjing 210046, China
Zhihong Chen: Institute for International Students, Nanjing University, No. 22, Hankou Road, Nanjing 210093, China
Jian Li: School of Business, Nan Jing Normal University, No. 1, Wenyuan Road, Qixia District, Nanjing 210023, China

Sustainability, 2019, vol. 11, issue 3, 1-16

Abstract: Due to the long-term nature and information asymmetry, SMEs (Small and Medium Enterprises) experience serious financial constraints that affect their R&D investments. This article examines the effect of trade credit maintaining sustainable R&D investment of SMEs under financial constraints. Using the panel data of Chinese SMEs from 2002–2014, it was found that although the R&D investments of SMEs are restricted by financial constraints, trade credit can maintain the sustainability of enterprises’ R&D investment. Private enterprises are more reliant on trade credit, which can be intensified during periods of monetary tightening. Considering the counterfactual framework and the endogenous problems, the empirical results were also robust when using propensity score matching. To summarize, this article develops a new explanation for maintaining sustainable R&D investment of SMEs under financial constraints in developing countries.

Keywords: trade credit; financial constraints; sustainable R&D investment of SMEs (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://www.mdpi.com/2071-1050/11/3/843/pdf (application/pdf)
https://www.mdpi.com/2071-1050/11/3/843/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:11:y:2019:i:3:p:843-:d:203878

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().