Capital Structure for Multinational Inter- and Intra-firm Innovation Collaborations

This study investigates how two competing capital structure theories: the pecking order and the static trade-off models, impact financing decisions in multinational interand intra-firm innovation collaborations. The results show that for the pecking order model, debt repayment, working capital, capital expenditure and operating cash flow are the main variables determining a deficiency in internal funds, as well as the key determinants of capital structure in multinational inter-firm innovation collaborations. Working capital is the main variable determining a deficiency in internal funds and the key determinant of capital structure in multinational intra-firm innovation collaborations. In contrast, for the static trade-off model, size and uniqueness are key variables determining capital structure in multinational inter-firm innovation collaborations. Growth and uniqueness are key variables determining capital structure in multinational intra-firm innovation collaborations. This study fills a gap in the existing research on the capital structure policy of multinational interand intra-firm innovation collaborations, and describes capital structure determinants in polar multinational business expansion models.