The determinants of R&D Investment: the role of Cash flow and Capabilities

Francesco Bogliacino and Sebastian Gómez Cardona ()
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Sebastian Gómez Cardona: Departamento de Economía, Universidad EAFIT
Authors registered in the RePEc Author Service: Sebastian Gomez-Cardona ()

No 2010-10, JRC Working Papers on Corporate R&D and Innovation from Joint Research Centre

Abstract: In this paper we have estimated a behavioural equation for R&D investment. We assess the impact of liquidity constraints and capabilities, measured respectively as internal cash flow and distance from the technological frontier. Our estimation is performed on an industry level panel covering fifteen European countries from 1996 to 2005 and on a sample of European R&D performers extracted from COMPUSTAT covering 2000-2008. Both at industry level and firm level we found that financing constraints exist and that the distance from the frontier negatively affects the decision to engage in R&D. We claim that the implied divergence pattern opens a gap for policy intervention, but that these policies should be correctly tailored and should also promote enablers of technological change.

Keywords: R&D; liquidity constraints; technological frontier; panel data (search for similar items in EconPapers)
JEL-codes: D24 L50 O33 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2010-12
New Economics Papers: this item is included in nep-eff, nep-eur and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ipt:wpaper:201010

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