Financial Constraints for R&D and Innovation: New Evidence from a Survey Experiment

Dirk Czarnitzki and Marek Giebel

No 683800, Working Papers of Department of Management, Strategy and Innovation, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven

Abstract: We utilize a new survey experiment to evaluate the existence and degree of financial constraints for R&D in the economy. The experiment does not only allow to deduct the presence of financial constraints, but also to evaluate their economic significance. Using data on German companies, we find that financial constraints for R&D exist but that their relevance might have been overestimated in the literature. Most R&D projects that have not been implemented because of financial constraints turn out to have low expected marginal rates of return. While this findings stands in some contrast to other studies, we also find several results that are in line with the literature: young firms are most constrained and the constraints occur at the intensive margin, i.e. our results do not suggest that non-innovative companies are deterred from innovation. Instead, highly innovative companies are restricted by the capital market.

Keywords: Innovation; Financial Constraints; Survey Experiment (search for similar items in EconPapers)
Pages: 33
Date: 2021-11-18
New Economics Papers: this item is included in nep-cfn, nep-ent, nep-eur, nep-fdg, nep-ino, nep-ppm, nep-sbm and nep-tid
Note: paper number MSI_2110
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Published in FEB Research Report MSI_2110, issue MSI_2110, pages 1-33

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https://lirias.kuleuven.be/retrieve/638617 Published version (application/pdf)

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Working Paper: Financial constraints for R&D and innovation: New evidence from a survey experiment (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:msiper:683800

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