Is Money All? Financing Versus Knowledge and Demand Constraints to Innovation

IEB Working Paper N. 2013/021

38 Pages Posted: 17 Oct 2013

See all articles by Gabriele Pellegrino

Gabriele Pellegrino

Ecole Polytechnique Fédérale de Lausanne

Maria Savona

University of Sussex

Multiple version iconThere are 2 versions of this paper

Date Written: July 9, 2013

Abstract

The paper adds to the scattered empirical evidence on the role of obstacles to innovation in a three-fold way. First, we correct for the usual sample selection bias by filtering out firms not interested in innovation from ‘potential innovators’. Second, we assess what mostly affects firms’ propensity to realize innovative outputs. Third, we do so in a panel framework by using an unbalanced panel of UK firm for the period 2002-2010. We find that demand- and market-related factors are as important as financing conditions in determining firms’ innovation failures. This evidence puts much of the latest hype on finance in perspective.

Keywords: Barriers to innovation, innovative firms, potential innovators, failed innovators, panel data

JEL Classification: C23, O31, 032, 033

Suggested Citation

Pellegrino, Gabriele and Savona, Maria, Is Money All? Financing Versus Knowledge and Demand Constraints to Innovation (July 9, 2013). IEB Working Paper N. 2013/021. Available at SSRN: https://ssrn.com/abstract=2341095 or http://dx.doi.org/10.2139/ssrn.2341095

Gabriele Pellegrino

Ecole Polytechnique Fédérale de Lausanne ( email )

Station 5
Odyssea 1.04
1015 Lausanne, CH-1015
Switzerland

Maria Savona (Contact Author)

University of Sussex ( email )

Sussex House
Falmer
Brighton, Sussex BNI 9RH
United Kingdom

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