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Perform, start, continue R&D activities: do financial constraints matter?

Author

Listed:
  • Bianca Maria Chirita

    (Universitat de València)

  • Juan A. Máñez Castillejo

    (Universitat de València)

  • Óscar Vicente-Chirivella

    (Universitat de València)

Abstract

This study performs a comprehensive analysis of the importance of the financial constraints on: general firms’ decisions to perform R&D, R&D intensity, firms’ decision to start performing R&D, and R&D persistence. Different dimensions such as profitability, liquidity, total assets, solvency, repaying ability and the cost of the external financing are summarized in a synthetic index to build our financial constraints variable. We estimate our models using firm-level data of Spanish manufacturing drawn from the Survey of Business Strategies, for the period 1992–2016. We find that financial health is associated with the likelihood of performing R&D. Besides, we differentiate how financial health may influence both the decision to start R&D activities and the decision to continue them. Our results suggest that financial health is relevant in SMEs’ decisions to start R&D activities and persist in them. In contrast, for large firms, financial constraints seem to be relevant only for the decision to continue engaged in R&D activities. These findings highlight the importance of analyzing separately the role of financial constraints in different stages of R&D decisions.

Suggested Citation

  • Bianca Maria Chirita & Juan A. Máñez Castillejo & Óscar Vicente-Chirivella, 2025. "Perform, start, continue R&D activities: do financial constraints matter?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 15(1), pages 131-173, March.
    • Handle: RePEc:spr:eurasi:v:15:y:2025:i:1:d:10.1007_s40821-024-00284-5
    DOI: 10.1007/s40821-024-00284-5
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