The determinants of YICs’ R&D activity

Jose Garcia-Quevedo, Gabriele Pellegrino and Marco Vivarelli ()

No 2011/31, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: This paper examines the determinants of young innovative companies’ (YICs) R&D activities taking into account the autoregressive nature of innovation. Using a large longitudinal dataset comprising Spanish manufacturing firms over the period 1990-2008, we find that previous R&D experience is a fundamental determinant for mature and young firms, albeit to a smaller extent in the case of the YICs, suggesting that their innovation behaviour is less persistent and more erratic. Moreover, our results suggest that firm and market characteristics play a distinct role in boosting the innovation activity of firms of different age. In particular, while market concentration and the degree of product diversification are found to be important in boosting R&D activities in the sub-sample of mature firms only, YICs’ spending on R&D appears to be more sensitive to demand-pull variables, suggesting the presence of credit constraints. These results have been obtained using a recently proposed dynamic type-2 tobit estimator, which accounts for individual effects and efficiently handles the initial conditions problem.

Keywords: R&D; innovation; Young Innovative Companies (YICs); dynamic type-2 tobit estimator (search for similar items in EconPapers)
JEL-codes: O31 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2011
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Related works:
Working Paper: The determinants of YIc's R&D activity (2011)
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