european-commission

Investments and innovation: empirical evidence at the firm level for Europe

Author: Pietro Moncada Paterno’ Castello

Date: 16 May 2016

Type: Other

Topic: Innovation

Introduction:

Corporate investments in research and development (R&D) and innovation have a number of characteristics that make it more difficult to finance than other investments. The financial crisis has led to problems of access to the credit on which innovation activities crucially rely. Credit constraints might have caused market failures in relation to investments in innovation and R&D. Our innovation expert Pietro Moncada Paterno’ Castello investigated these matters, providing new conceptualisations and empirical evidence at the firm level for Europe. You can find the abstract of the paper in the following section and have access to the full text of the paper, which is attached at the bottom of this page.

ABSTRACT


The relationship between financing constraints, investments in research and development (R&D) and innovative performances has recently attracted renewed attention in the aftermath of a financial crisis that has led to problems of access to the credit on which innovation activities crucially rely. In spite of past developments in the theoretical analysis and in the data and methodologies for empirical investigation, some issues have remained unexplored to date. In this introduction to the special issue, we examine the contribution of the papers it contains, which provide new conceptualisations and empirical evidence at the firm level for Europe. Most previous research results, which were mainly based on extending models of financing constraints and physical investments to R&D investments, are confirmed, while new insights about this relationship are uncovered, in terms of the structural characteristics of the constrained firms, of the industries in which they operate, of their innovative activities and of the innovation outcomes they achieve.

Credit

Let me remind you that credit is the lifeblood of business, the lifeblood of prices and jobs.

Herbert Hoover

Health

Good health is essential to social and economical development and it empowers all of the public sectors.

World Health Organization

Innovation

Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth.

Peter Drucker

Human Capital

Talent is a source from which water flows constantly renewed. But this source loses its value unless it is properly used.

Ludwig Wittgenstein