The Determinants of YIC's R&D Activity

XREAP No. 2011-20

45 Pages Posted: 15 Dec 2011

See all articles by Jose Garcia-Quevedo

Jose Garcia-Quevedo

Barcelona Institute of Economics (IEB); University of Barcelona - Faculty of Economic Science and Business Studies

Gabriele Pellegrino

Catholic University of the Sacred Heart of Milan

Marco Vivarelli

Universita Cattolica del Sacro Cuore, Milano; IZA Institute of Labor Economics

Date Written: December 15, 2011

Abstract

This paper examines the determinants of young innovative companies’ (YICs) R&D activities taking into account the autoregressive nature of innovation. Using a large longitudinal dataset comprising Spanish manufacturing firms over the period 1990-2008, we find that previous R&D experience is a fundamental determinant for mature and young firms, albeit to a smaller extent in the case of the YICs, suggesting that their innovation behavior is less persistent and more erratic. Moreover, our results suggest that firm and market characteristics play a distinct role in boosting the innovation activity of firms of different age. In particular, while market concentration and the degree of product diversification are found to be important in boosting R&D activities in the sub-sample of mature firms only, YICs’ spending on R&D appears to be more sensitive to demand-pull variables, suggesting the presence of credit constraints. These results have been obtained using a recently proposed dynamic type-2 tobit estimator, which accounts for individual effects and efficiently handles the initial conditions problem.

Keywords: R&D, innovation, Young Innovative Companies (YICs), dynamic type-2 tobit estimator

JEL Classification: O31

Suggested Citation

Garcia-Quevedo, Jose and Pellegrino, Gabriele and Vivarelli, Marco, The Determinants of YIC's R&D Activity (December 15, 2011). XREAP No. 2011-20. Available at SSRN: https://ssrn.com/abstract=1972933 or http://dx.doi.org/10.2139/ssrn.1972933

Jose Garcia-Quevedo (Contact Author)

Barcelona Institute of Economics (IEB) ( email )

Av. Diagonal 690
Barcelona, E-08034
Spain

University of Barcelona - Faculty of Economic Science and Business Studies ( email )

Barcelona
Spain

Gabriele Pellegrino

Catholic University of the Sacred Heart of Milan

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

Marco Vivarelli

Universita Cattolica del Sacro Cuore, Milano ( email )

Largo Gemelli 1
Milano, 20123
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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