Endogenous Financial Constraints and Innovation

Industrial and Corporate Change, https://doi.org/10.1093/icc/dtaa035

49 Pages Posted: 27 Jan 2019 Last revised: 5 Nov 2020

See all articles by Henry Lahr

Henry Lahr

The Open University - Business School; University of Cambridge - Centre for Business Research (CBR)

Andrea Mina

Scuola Superiore Sant'Anna; Centre for Business Research, Cambridge Judge Business School, University of Cambridge

Date Written: December 15, 2018

Abstract

We investigate which indicators of a firm’s innovation activities are associated with financial constraints and analyse the nature and direction of causal links between innovation and financial constraints. By estimating simultaneous bivariate probit models on data from the UK Innovation Surveys, we show that among innovation inputs, R&D activity increases the likelihood that firms face financial constraints while innovation outputs in the form of new-to-market products seem to generate financial constraints. Reverse effects on innovation appear limited to external R&D.

Keywords: Innovation; Financial Constraints; R&D; Intangible Investment

JEL Classification: D92; E22; G32; O31; O32

Suggested Citation

Lahr, Henry and Mina, Andrea, Endogenous Financial Constraints and Innovation (December 15, 2018). Industrial and Corporate Change, https://doi.org/10.1093/icc/dtaa035, Available at SSRN: https://ssrn.com/abstract=3316197 or http://dx.doi.org/10.2139/ssrn.3316197

Henry Lahr (Contact Author)

The Open University - Business School ( email )

Milton Keynes, MK6 7AA
United Kingdom

University of Cambridge - Centre for Business Research (CBR) ( email )

Top Floor, Judge Business School Building
Trumpington Street
Cambridge, CB2 1AG
United Kingdom

HOME PAGE: http://www.cbr.cam.ac.uk

Andrea Mina

Scuola Superiore Sant'Anna ( email )

Piazza Martiri delle LIbertà 33
Pisa, Pisa 56127
Italy

HOME PAGE: http://https://www.santannapisa.it/it/andrea-mina

Centre for Business Research, Cambridge Judge Business School, University of Cambridge ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom

HOME PAGE: http://https://www.cbr.cam.ac.uk/people/the-team/andrea-mina/

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