Do financial constraints threat the innovation process? Evidence from Portuguese firms

Filipe Silva () and Carlos Carreira ()

No 2011-10, GEMF Working Papers from GEMF, Faculty of Economics, University of Coimbra

Abstract: This paper broadly addresses the financing problems of the innovation process, by analysing the extent to which financial constraints hinder firms' investment in R&D and innovation, as well as investigating the role of public financial support in alleviating such constraints. In order to overcome the problems associated with measuring financial constraints, we make use of both indirect and direct measures of constraints. Our findings suggest that while financial constraints have a perverse effect upon R&D investment and innovation, there is no evidence that subsidies mitigate such constraints. Accordingly, we raise a number of questions regarding the efficiency and effectiveness of subsidies in alleviating firms' financial constraints.

Keywords: innovation; R&D investment; financial constraints; subsidies; Portugal. (search for similar items in EconPapers)
JEL-codes: D92 G32 L00 L20 O30 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2011-05
New Economics Papers: this item is included in nep-bec, nep-ino, nep-knm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published in Economics of Innovation and New Technology 21(8): 701-736, 2012.

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Journal Article: Do financial constraints threat the innovation process? Evidence from Portuguese firms (2012)
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