Universität zu Köln

Peters, Bettina ORCID: 0000-0002-8611-2016, Roberts, Mark J. and Vuong, Van Anh (2017). Dynamic R&D choice and the impact of the firm's financial strength. Econ. Innov. New Technol., 26 (1-2). S. 134 - 150. ABINGDON: ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD. ISSN 1476-8364

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Abstract

This article investigates how a firm's financial strength affects its dynamic decision to invest in R&D. We estimate a dynamic model of R&D choice using data for German firms in high-tech manufacturing industries. The model incorporates a measure of the firm's financial strength, derived from its credit rating, which is shown to lead to substantial differences in estimates of the costs and expected long-run benefits from R&D investment. Financially strong firms have a higher probability of generating innovations from their R&D investment, and the innovations have a larger impact on productivity and profits. Averaging across all firms, the long-run benefit of investing in R&D equals 6.6% of firm value. It ranges from 11.6% for firms in a strong financial position to 2.3% for firms in a weaker financial position.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Peters, Bettina UNSPECIFIED orcid.org/0000-0002-8611-2016 UNSPECIFIED Roberts, Mark J. UNSPECIFIED UNSPECIFIED UNSPECIFIED Vuong, Van Anh UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-243278
DOI:	10.1080/10438599.2016.1202516
Journal or Publication Title:	Econ. Innov. New Technol.
Volume:	26
Number:	1-2
Page Range:	S. 134 - 150
Date:	2017
Publisher:	ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD
Place of Publication:	ABINGDON
ISSN:	1476-8364
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language DEVELOPMENT INVESTMENT; PRODUCTIVITY; CONSTRAINTS Multiple languages Economics Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/24327