Financing constraints and the timing of innovations in the German services sector

Martin Kukuk and Manfred Stadler

No 159, Tübinger Diskussionsbeiträge from University of Tübingen, School of Business and Economics

Abstract: Using newly available data at the firm level, this study provides convincing evidence of the importance of financial constraints in explaining the timing of innovations in the German services sector. Based on a dynamic model of firms' optimal R&D behavior under financial constraints, we estimate various versions of an econometric specification of the model with dichotomous innovation data by using a univariate ordered probit model. Our results are consistent with the theoretical view that, because of capital markets imperfections, internal finance should be an important determinant of innovative activities by private firms in the manufacturing sector as well as in the services sector.

Keywords: Innovation; Financial Constraints; Ordinal Regressors; Indirect Inference Estimation (search for similar items in EconPapers)
JEL-codes: C4 G30 O31 (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Financing Constraints and the Timing of Innovations in the German Services Sector (2001)
Working Paper: Financing Constraints and the Timing of Innovations in the German Services Sector (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tuedps:159

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