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The sensitivity of R&D investments to cash flows: Comparing young and old EU and US leading innovators

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  • Michele Cincera
  • Julien Ravet
  • Reinhilde Veugelers

Abstract

Using firm level information on the world leading R&D investors and employing a system GMM estimation, this paper investigates how sensitive R&D investments are to cash flow movements, which would be suggestive of financial constraints. The analysis confirms that over the last decade the R&D investments of younger aged leading innovators appear to be more sensitive to cash flows compared to their older counterparts and that this holds particularly for EU younger aged leading innovators compared to their US counterparts, particularly in medium and high tech sectors.

Suggested Citation

  • Michele Cincera & Julien Ravet & Reinhilde Veugelers, 2015. "The sensitivity of R&D investments to cash flows: Comparing young and old EU and US leading innovators," Working Papers of Department of Management, Strategy and Innovation, Leuven 497091, KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven.
    • Handle: RePEc:ete:msiper:497091
    Note: paper number MSI_1508
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    References listed on IDEAS

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    Cited by:

    1. Aurélien Quignon & Nadine Levratto, 2021. "Innovation Performance and the Signal Effect: Evidence from a European Program," EconomiX Working Papers 2021-34, University of Paris Nanterre, EconomiX.
    2. Dai, Xiaoyong & Li, Yanchao & Chen, Kaihua, 2021. "Direct demand-pull and indirect certification effects of public procurement for innovation," Technovation, Elsevier, vol. 101(C).
    3. Greta Falavigna & Roberto Ippoliti, 2021. "Financial Constraints and the Sustainability of Dividend Payout Policy," Sustainability, MDPI, vol. 13(11), pages 1-15, June.
    4. Santos, Anabela M. & Cincera, Michele & Cerulli, Giovanni, 2024. "Sources of financing: Which ones are more effective in innovation–growth linkage?," Economic Systems, Elsevier, vol. 48(2).
    5. Pietro Santoleri & Andrea Mina & Alberto Di Minin & Irene Martelli, 2024. "The Causal Effects of R&D Grants: Evidence from a Regression Discontinuity," The Review of Economics and Statistics, MIT Press, vol. 106(6), pages 1495-1510, November.
    6. 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.
    7. Abdin, Joynal & Sharma, Abhijit & Trivedi, Rohit & Wang, Chengang, 2024. "Financing constraints, intellectual property rights protection and incremental innovation: Evidence from transition economy firms," Technological Forecasting and Social Change, Elsevier, vol. 198(C).
    8. Kang, Taewon & Baek, Chulwoo & Lee, Jeong-Dong, 2017. "The persistency and volatility of the firm R&D investment: Revisited from the perspective of technological capability," Research Policy, Elsevier, vol. 46(9), pages 1570-1579.
    9. Pietro Moncada-Paternò-Castello, 2022. "Top R&D investors, structural change and the R&D growth performance of young and old firms," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 1-33, March.
    10. Milani, Sahar & Neumann, Rebecca, 2022. "R&D, patents, and financing constraints of the top global innovative firms," Journal of Economic Behavior & Organization, Elsevier, vol. 196(C), pages 546-567.
    11. Anabela Santos & Michele Cincera, 2022. "Determinants of financing constraints," Small Business Economics, Springer, vol. 58(3), pages 1427-1439, March.
    12. Björn Alecke & Timo Mitze & Annekatrin Niebuhr, 2021. "Building a bridge over the valley of death? New pathways for innovation policy in structurally weak regions," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 41(2), pages 185-210, October.
    13. Yamazaki, Akio, 2022. "Environmental taxes and productivity: Lessons from Canadian manufacturing," Journal of Public Economics, Elsevier, vol. 205(C).
    14. Nadine Levratto & Aurelien Quignon, 2021. "Innovation Performance and the Signal Effect: Evidence from a European Program," Working Papers halshs-03466903, HAL.
    15. Mina, Andrea & Minin, Alberto Di & Martelli, Irene & Testa, Giuseppina & Santoleri, Pietro, 2021. "Public funding of innovation: Exploring applications and allocations of the European SME Instrument," Research Policy, Elsevier, vol. 50(1).
    16. 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.
    17. Hayoung Park & Taewon Kang & Jeong-Dong Lee, 2019. "R&D Dynamics And Firm Growth: The Importance Of R&D Persistency In The Economic Crisis," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 23(05), pages 1-24, June.

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