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Financial Constraints: Routine Versus Cutting Edge R&D Investment

Hanna L. Binz and Dirk Czarnitzki
Authors registered in the RePEc Author Service: Hanna Hottenrott ()

No 08-005, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: We analyze financial constraints for R&D, where we account for heterogeneity among investments which has been neglected in previous literature. According to economic theory, investments should be distinguished by their degree of uncertainty, e.g. routine R&D versus cutting-edge R&D. Financial constraints should be more binding for cutting-edge R&D than for routine R&D. Using panel data we find that R&D spending of firms devoting a significant fraction of R&D to cutting-edge projects is curtailed by credit constraints while routine R&D investments are not. This has important policy implications with respect to the distribution of R&D subsidies in the economy.

Keywords: R&D; Financial Constraints; Panel Data (search for similar items in EconPapers)
JEL-codes: O32 O31 (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-ino, nep-ipr, nep-pr~, nep-mic and nep-tid
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https://www.econstor.eu/bitstream/10419/24675/1/dp08005.pdf (application/pdf)

Related works:
Journal Article: Financial Constraints: Routine Versus Cutting Edge R&D Investment (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:7016

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