Perform, start, continue R&D activities: do financial constraints matter?

Bianca Maria Chirita (), Juan A. Máñez Castillejo () and Óscar Vicente-Chirivella ()
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Bianca Maria Chirita: Universitat de València
Juan A. Máñez Castillejo: Universitat de València

Eurasian Business Review, 2025, vol. 15, issue 1, No 5, 173 pages

Abstract: Abstract This study performs a comprehensive analysis of the importance of the financial constraints on: general firms’ decisions to perform R&D, R&D intensity, firms’ decision to start performing R&D, and R&D persistence. Different dimensions such as profitability, liquidity, total assets, solvency, repaying ability and the cost of the external financing are summarized in a synthetic index to build our financial constraints variable. We estimate our models using firm-level data of Spanish manufacturing drawn from the Survey of Business Strategies, for the period 1992–2016. We find that financial health is associated with the likelihood of performing R&D. Besides, we differentiate how financial health may influence both the decision to start R&D activities and the decision to continue them. Our results suggest that financial health is relevant in SMEs’ decisions to start R&D activities and persist in them. In contrast, for large firms, financial constraints seem to be relevant only for the decision to continue engaged in R&D activities. These findings highlight the importance of analyzing separately the role of financial constraints in different stages of R&D decisions.

Keywords: Financial constraints; R&D decisions; Persistence in R&D; Dynamic discrete panel data models; Survival analysis (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s40821-024-00284-5

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