Is Money All? Financing Versus Knowledge and Demand Constraints to Innovation
IEB Working Paper N. 2013/021
38 Pages Posted: 17 Oct 2013
Date Written: July 9, 2013
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: Suggested Citation