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Manufacturing R&D investment efficiency and financing constraints: evidence from China

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  • Lu Guo
  • WeiYa Long
  • Zhimin Dai

Abstract

Enhancing the level of Research and Development (R&D) investment by China’s manufacturing enterprises and thus improving their independent innovation capabilities are the core to enhance the country’s industrial competitiveness. This research thus explores the threshold effect of financing constraints on manufacturing R&D investment from the perspective of financing constraints which impact such investment. We first define the related concepts of financing constraints and R&D investment and then discuss the theoretical basis for forming those constraints. The research data sample covers 68 A-share listed manufacturing companies from 2007 to 2016, and we apply the panel threshold model to conduct empirical research. The results show that financing constraints have a negative impact on the R&D investment of listed manufacturing companies, and that there is a non-linear relationship between threshold effects. When the asset-liability ratio is less than or equal to 0.4142, the financing constraint has a small negative impact on the R&D investment of these firms; when the asset-liability ratio is greater than 0.4142, the financing constraint has a greater negative impact on their R&D investment. Based on the findings, we propose relevant policy recommendations.

Suggested Citation

  • Lu Guo & WeiYa Long & Zhimin Dai, 2021. "Manufacturing R&D investment efficiency and financing constraints: evidence from China," Applied Economics, Taylor & Francis Journals, vol. 53(6), pages 676-687, February.
    • Handle: RePEc:taf:applec:v:53:y:2021:i:6:p:676-687
    DOI: 10.1080/00036846.2020.1808580
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    Cited by:

    1. Kai Zhao & Wanshu Wu & Shengxiang Xu & Jialin Liu & Weidong Sun, 2024. "Location-Oriented Policies in China: Establishment of State-Level Development Zones and Enterprise Innovation Behaviors," Sustainability, MDPI, vol. 16(8), pages 1-22, April.
    2. Zhang, Ruchuan & Gao, Weiyan & Chen, Shanshan & Zhou, Li & Li, Aijun, 2024. "Dose digital transformation contribute to improving financing efficiency? Evidence and implications for energy enterprises in China," Energy, Elsevier, vol. 300(C).
    3. Changchun Zhu & Na Li & Jing Ma & Xiaobin Qi, 2024. "CEOs' digital technology backgrounds and enterprise digital transformation: The mediating effect of R&D investment and corporate social responsibility," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 2557-2573, May.
    4. Cui, Zhuqing & Diwu, Simin, 2024. "Human capital upgrading and enterprise innovation efficiency," Finance Research Letters, Elsevier, vol. 65(C).

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