{"title":"Do Financial Constraints Reduce Process Innovation? Evidence from Australian Firms*","authors":"Siddarth Roche, Sizhong Sun, Riccardo Welters","doi":"10.1111/1475-4932.12703","DOIUrl":null,"url":null,"abstract":"<p>Accessing external finance for innovation is difficult. We study the effect of financial constraints on the probability of conducting process innovation, while also considering the role of past experience. We show a firm's optimal process innovation decision is a function of its previous decision and financial constraints, which naturally leads to a set of population moments for empirical testing with Australian microdata from 2006 to 2018. We find that if a firm did not conduct process innovation previously, financial constraints reduce its probability of process innovation by around 10 per cent. Whereas with previous process innovation, financial constraints reduce the probability by around 12 per cent.</p>","PeriodicalId":47484,"journal":{"name":"Economic Record","volume":"98 323","pages":"335-353"},"PeriodicalIF":1.1000,"publicationDate":"2022-11-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/1475-4932.12703","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Economic Record","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/1475-4932.12703","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
Accessing external finance for innovation is difficult. We study the effect of financial constraints on the probability of conducting process innovation, while also considering the role of past experience. We show a firm's optimal process innovation decision is a function of its previous decision and financial constraints, which naturally leads to a set of population moments for empirical testing with Australian microdata from 2006 to 2018. We find that if a firm did not conduct process innovation previously, financial constraints reduce its probability of process innovation by around 10 per cent. Whereas with previous process innovation, financial constraints reduce the probability by around 12 per cent.
期刊介绍：
Published on behalf of the Economic Society of Australia, the Economic Record is intended to act as a vehicle for the communication of advances in knowledge and understanding in economics. It publishes papers in the theoretical, applied and policy areas of economics and provides a forum for research on the Australian economy. It also publishes surveys in economics and book reviews to facilitate the dissemination of knowledge.
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