IDEAS home Printed from https://ideas.repec.org/p/ipt/wpaper/201907.html
   My bibliography  Save this paper

Financial constraints and intangible investments. Do innovative and non-innovative firms differ?

Author

Listed:
  • Sandro Montresor

    (School of Advanced Studies, Gran Sasso Science Institute)

  • Antonio Vezzani

    (Roma Tre University)

Abstract

We investigate the extent to which financial constraints hamper the firms’ investment in intangibles. Drawing on the extant literature, we maintain that a distinction should be kept between innovators and non-innovators. Moreover, we argue that such a distinction should be investigated along the whole spectrum of intangibles firms invest and by addressing the risks of reverse causality and simultaneity bias in the relationship. Through an original quasi-panel extension of a recent European Innobarometer survey, we estimate two sets of recursive bivariate probit models – for innovative and non-innovative firms’ investments – from which interesting results emerge. Financial barriers hamper the investment of both kinds of firms only for R&D, design, and organisation and business processes. With respect to other intangibles, instead, financial barriers act only on innovators (or non-innovators) or are even absent. Furthermore, the hampering role of financial barriers distributes differently across different intangibles between innovators and non-innovators.

Suggested Citation

  • Sandro Montresor & Antonio Vezzani, 2019. "Financial constraints and intangible investments. Do innovative and non-innovative firms differ?," JRC Working Papers on Corporate R&D and Innovation 2019-07, Joint Research Centre.
    • Handle: RePEc:ipt:wpaper:201907
    as

    Download full text from publisher

    File URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC118946
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Meng, Yang & Brennan, Alan & Purshouse, Robin & Hill-McManus, Daniel & Angus, Colin & Holmes, John & Meier, Petra Sylvia, 2014. "Estimation of own and cross price elasticities of alcohol demand in the UK—A pseudo-panel approach using the Living Costs and Food Survey 2001–2009," Journal of Health Economics, Elsevier, vol. 34(C), pages 96-103.
    2. Pellegrino, Gabriele & Savona, Maria, 2017. "No money, no honey? Financial versus knowledge and demand constraints on innovation," Research Policy, Elsevier, vol. 46(2), pages 510-521.
    3. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(2), pages 701-728.
    4. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    5. Mairesse, Jacques & Mohnen, Pierre, 2010. "Using Innovation Surveys for Econometric Analysis," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 1129-1155, Elsevier.
    6. Campello, Murillo & Graham, John R. & Harvey, Campbell R., 2010. "The real effects of financial constraints: Evidence from a financial crisis," Journal of Financial Economics, Elsevier, vol. 97(3), pages 470-487, September.
    7. Archibugi, Daniele & Filippetti, Andrea & Frenz, Marion, 2013. "Economic crisis and innovation: Is destruction prevailing over accumulation?," Research Policy, Elsevier, vol. 42(2), pages 303-314.
    8. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
    9. Emanuele Brancati, 2015. "Innovation financing and the role of relationship lending for SMEs," Small Business Economics, Springer, vol. 44(2), pages 449-473, February.
    10. Andrea Mina & Henry Lahr & Alan Hughes, 2013. "The demand and supply of external finance for innovative firms," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(4), pages 869-901, August.
    11. Frederique Savignac, 2008. "Impact Of Financial Constraints On Innovation: What Can Be Learned From A Direct Measure?," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 17(6), pages 553-569.
    12. Hölzl, Werner & Janger, Jürgen, 2014. "Distance to the frontier and the perception of innovation barriers across European countries," Research Policy, Elsevier, vol. 43(4), pages 707-725.
    13. Andrea Filippetti & Beatrice D’Ippolito, 2017. "Appropriability of design innovation across organisational boundaries: exploring collaborative relationships between manufacturing firms and designers in Italy," Industry and Innovation, Taylor & Francis Journals, vol. 24(6), pages 613-632, August.
    14. Malerba, Franco & Orsenigo, Luigi, 1995. "Schumpeterian Patterns of Innovation," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 19(1), pages 47-65, February.
    15. Guariglia, Alessandra, 2008. "Internal financial constraints, external financial constraints, and investment choice: Evidence from a panel of UK firms," Journal of Banking & Finance, Elsevier, vol. 32(9), pages 1795-1809, September.
    16. Mariagrazia Squicciarini & Marie Le Mouel, 2012. "Defining and Measuring Investment in Organisational Capital: Using US Microdata to Develop a Task-based Approach," OECD Science, Technology and Industry Working Papers 2012/5, OECD Publishing.
    17. Hall, Bronwyn H. & Lerner, Josh, 2010. "The Financing of R&D and Innovation," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 609-639, Elsevier.
    18. Michele Cincera & Julien Ravet & Reinhilde Veugelers, 2016. "The sensitivity of R&D investments to cash flows: comparing young and old EU and US leading innovators," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 25(3), pages 304-320, April.
    19. Mark Freel, 2007. "Are Small Innovators Credit Rationed?," Small Business Economics, Springer, vol. 28(1), pages 23-35, January.
    20. P. Mohnen & F. Palm & S. Loeff & A. Tiwari, 2008. "Financial Constraints and Other Obstacles: are they a Threat to Innovation Activity?," De Economist, Springer, vol. 156(2), pages 201-214, June.
    21. Dirk Czarnitzki, 2006. "Research And Development In Small And Medium‐Sized Enterprises: The Role Of Financial Constraints And Public Funding," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(3), pages 335-357, July.
    22. Maria Luisa Mancusi & Andrea Vezzulli, 2014. "R&D AND CREDIT RATIONING IN SMEs," Economic Inquiry, Western Economic Association International, vol. 52(3), pages 1153-1172, July.
    23. Dirk Czarnitzki & Hanna Hottenrott, 2011. "R&D investment and financing constraints of small and medium-sized firms," Small Business Economics, Springer, vol. 36(1), pages 65-83, January.
    24. Pablo D'Este & Francesco Rentocchini & Jaider Vega-Jurado, 2014. "The Role of Human Capital in Lowering the Barriers to Engaging in Innovation: Evidence from the Spanish Innovation Survey," Industry and Innovation, Taylor & Francis Journals, vol. 21(1), pages 1-19, January.
    25. Bronwyn H. Hall & Francesca Lotti & Jacques Mairesse, 2013. "Evidence on the impact of R&D and ICT investments on innovation and productivity in Italian firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 22(3), pages 300-328, April.
    26. Carlo Altomonte & Simona Gamba & Maria Luisa Mancusi & Andrea Vezzulli, 2016. "R&D investments, financing constraints, exporting and productivity," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 25(3), pages 283-303, April.
    27. Sandro Montresor & Antonio Vezzani, 2016. "Intangible investments and innovation propensity: Evidence from the Innobarometer 2013," Industry and Innovation, Taylor & Francis Journals, vol. 23(4), pages 331-352, May.
    28. Dan Andrews & Alain de Serres, 2012. "Intangible Assets, Resource Allocation and Growth: A Framework for Analysis," OECD Economics Department Working Papers 989, OECD Publishing.
    29. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
    30. Hempell, Thomas, 2003. "Do Computers Call for Training? Firm-level Evidence on Complementarities Between ICT and Human Capital Investments," ZEW Discussion Papers 03-20, ZEW - Leibniz Centre for European Economic Research.
    31. Gómez, Jaime & Vargas, Pilar, 2012. "Intangible resources and technology adoption in manufacturing firms," Research Policy, Elsevier, vol. 41(9), pages 1607-1619.
    32. Reeb, David M. & Mansi, Sattar A. & Allee, John M., 2001. "Firm Internationalization and the Cost of Debt Financing: Evidence from Non-Provisional Publicly Traded Debt," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 36(3), pages 395-414, September.
    33. Filipe Silva & Carlos Carreira, 2012. "Do financial constraints threat the innovation process? Evidence from Portuguese firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 21(8), pages 701-736, November.
    34. Baldwin, John & Lin, Zhengxi, 2002. "Impediments to advanced technology adoption for Canadian manufacturers," Research Policy, Elsevier, vol. 31(1), pages 1-18, January.
    35. Richard R. Nelson, 1991. "Why do firms differ, and how does it matter?," Strategic Management Journal, Wiley Blackwell, vol. 12(S2), pages 61-74, December.
    36. Hanna Hottenrott & Bronwyn H. Hall & Dirk Czarnitzki, 2016. "Patents as quality signals? The implications for financing constraints on R&D," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 25(3), pages 197-217, April.
    37. Galia, Fabrice & Legros, Diego, 2004. "Complementarities between obstacles to innovation: evidence from France," Research Policy, Elsevier, vol. 33(8), pages 1185-1199, October.
    38. Dominique Tourigny & Can Le, 2004. "Impediments to innovation faced by Canadian manufacturing firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 13(3), pages 217-250.
    39. Lee, Neil & Sameen, Hiba & Cowling, Marc, 2015. "Access to finance for innovative SMEs since the financial crisis," Research Policy, Elsevier, vol. 44(2), pages 370-380.
    40. Bronwyn H. Hall & Nathan Rosenberg (ed.), 2010. "Handbook of the Economics of Innovation," Handbook of the Economics of Innovation, Elsevier, edition 1, volume 1, number 1.
    41. Gabriele Pellegrino, 2018. "Barriers to innovation in young and mature firms," Journal of Evolutionary Economics, Springer, vol. 28(1), pages 181-206, January.
    42. D’Este, Pablo & Iammarino, Simona & Savona, Maria & von Tunzelmann, Nick, 2012. "What hampers innovation? Revealed barriers versus deterring barriers," Research Policy, Elsevier, vol. 41(2), pages 482-488.
    43. Loof, Hans & Heshmati, Almas, 2002. "Knowledge capital and performance heterogeneity: : A firm-level innovation study," International Journal of Production Economics, Elsevier, vol. 76(1), pages 61-85, March.
    44. Anna Thum-Thysen & Peter Voigt & Benat Bilbao-Osorio & Christoph Maier & Diana Ognyanova, 2017. "Unlocking Investment in Intangible Assets," European Economy - Discussion Papers 047, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    45. Belderbos, Rene & Sleuwaegen, Leo, 1996. "Japanese Firms and the Decision to Invest Abroad: Business Groups and Regional Core Networks," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 214-220, May.
    46. Simona Iammarino & Francesca Sanna-Randaccio & Maria Savona, 2009. "The perception of obstacles to innovation. Foreign multinationals and domestic firms in Italy," Revue d'économie industrielle, De Boeck Université, vol. 0(1), pages 75-104.
    47. Davide Antonioli & Alberto Marzucchi & Maria Savona, 2017. "Pain shared, pain halved? Cooperation as a coping strategy for innovation barriers," The Journal of Technology Transfer, Springer, vol. 42(4), pages 841-864, August.
    48. Daria Ciriaci, 2017. "Intangible resources: the relevance of training for European firms’ innovative performance," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(1), pages 31-54, April.
    49. Brian Cozzarin & Jennifer Percival, 2006. "Complementarities between organisational strategies and innovation," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(3), pages 195-217.
    50. Alex Coad & Gabriele Pellegrino & Maria Savona, 2016. "Barriers to innovation and firm productivity," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 25(3), pages 321-334, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kalantzis, Fotios & Dominguez, Sofia, 2022. "Are EU firms climate-ready? Micro evidence from EIBIS," EIB Working Papers 2022/08, European Investment Bank (EIB).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sandro Montresor & Antonio Vezzani, 2022. "Financial constraints to investing in intangibles: Do innovative and non-innovative firms differ?," The Journal of Technology Transfer, Springer, vol. 47(1), pages 1-32, February.
    2. García-Quevedo, José & Segarra-Blasco, Agustí & Teruel, Mercedes, 2018. "Financial constraints and the failure of innovation projects," Technological Forecasting and Social Change, Elsevier, vol. 127(C), pages 127-140.
    3. Zahler, Andrés & Goya, Daniel & Caamaño, Matías, 2022. "The primacy of demand and financial obstacles in hindering innovation," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    4. Vicente Salas-Fumás & Javier Ortiz, 2019. "Innovations’ Success and Failure in the Business Cycle," Sustainability, MDPI, vol. 11(15), pages 1-22, August.
    5. de-Oliveira, Fernando & Rodil-Marzábal, Óscar, 2019. "Structural characteristics and organizational determinants as obstacles to innovation in small developing countries," Technological Forecasting and Social Change, Elsevier, vol. 140(C), pages 306-314.
    6. Ortiz, Rodrigo & Fernandez, Viviana, 2022. "Business perception of obstacles to innovate: Evidence from Chile with pseudo-panel data analysis," Research in International Business and Finance, Elsevier, vol. 59(C).
    7. Pavla Matulova & Petra Maresova & Mohammad Ali Tareq & Kamil Kuča, 2018. "Open Innovation Session as a Tool Supporting Innovativeness in Strategies for High-Tech Companies in the Czech Republic," Economies, MDPI, vol. 6(4), pages 1-13, December.
    8. Anabela Santos & Michele Cincera, 2022. "Determinants of financing constraints," Small Business Economics, Springer, vol. 58(3), pages 1427-1439, March.
    9. Gabriele Pellegrino, 2015. "Barriers to innovation: can firm age help lower them?," Working Papers 2015/3, Institut d'Economia de Barcelona (IEB).
    10. Davide Antonioli & Alberto Marzucchi & Maria Savona, 2017. "Pain shared, pain halved? Cooperation as a coping strategy for innovation barriers," The Journal of Technology Transfer, Springer, vol. 42(4), pages 841-864, August.
    11. Jaureguy, Micaela Vidal & Bianchi, Carlos & Blanchard, Pablo, 2023. "Financial and knowledge barriers to innovation: Complementary and substitution effects on innovative effort," Research Policy, Elsevier, vol. 52(7).
    12. Pinget, Amandine, 2016. "Spécificités des déterminants des innovations environnementales : une approche appliquée aux PME [Specificities of determinants for environmental innovation : an approach applied to SMEs]," MPRA Paper 80108, University Library of Munich, Germany.
    13. Georgios Efthyvoulou & Priit Vahter, 2016. "Financial Constraints, Innovation Performance and Sectoral Disaggregation," Manchester School, University of Manchester, vol. 84(2), pages 125-158, March.
    14. Rajeev K. Goel & James W. Saunoris, 2022. "Foreign direct investment (FDI): friend or foe of non-innovating firms?," The Journal of Technology Transfer, Springer, vol. 47(4), pages 1162-1178, August.
    15. Amandine Pinget & Rachel Bocquet & Caroline Mothe, 2015. "Barriers to Environmental Innovation in SMEs: Empirical Evidence from French Firms," Post-Print hal-01300837, HAL.
    16. Pellegrino, Gabriele & Savona, Maria, 2017. "No money, no honey? Financial versus knowledge and demand constraints on innovation," Research Policy, Elsevier, vol. 46(2), pages 510-521.
    17. Gabriele Pellegrino, 2018. "Barriers to innovation in young and mature firms," Journal of Evolutionary Economics, Springer, vol. 28(1), pages 181-206, January.
    18. Grazia Cecere & Nicoletta Corrocher & Maria Luisa Mancusi, 2020. "Financial constraints and public funding of eco-innovation: empirical evidence from European SMEs," Small Business Economics, Springer, vol. 54(1), pages 285-302, January.
    19. Claudia Fuentes & Fernando Santiago & Serdal Temel, 2020. "Perception of innovation barriers by successful and unsuccessful innovators in emerging economies," The Journal of Technology Transfer, Springer, vol. 45(4), pages 1283-1307, August.
    20. Sasan Bakhtiari & Robert Breunig & Lisa Magnani & Jacquelyn Zhang, 2020. "Financial Constraints and Small and Medium Enterprises: A Review," The Economic Record, The Economic Society of Australia, vol. 96(315), pages 506-523, December.

    More about this item

    Keywords

    &D; intangibles; innovation; financial barriers.;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ipt:wpaper:201907. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Publication Officer (email available below). General contact details of provider: https://edirc.repec.org/data/ipjrces.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.