Dynamic R&D Choice and the Impact of the Firms Financial Strength

نویسندگان

  • Bettina Peters
  • Mark J. Roberts
  • Anh Vuong
چکیده

This article investigates how a …rm’s …nancial strength a¤ects its dynamic decision to invest in R&D. We estimate a dynamic model of R&D choice using data for German …rms in high-tech manufacturing industries. The model incorporates a measure of the …rm’s …nancial strength, derived from its credit rating, which is shown to lead to substantial di¤erences in estimates of the costs and expected long-run bene…ts from R&D investment. Financially strong …rms have a higher probability of generating innovations from their R&D investment, and the innovations have a larger impact on productivity and pro…ts. Averaging across all …rms, the long run bene…t of investing in R&D equals 6.6 percent of …rm value. It ranges from 11.6 percent for …rms in a strong …nancial position to 2.3 percent for …rms in a weaker …nancial position.

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تاریخ انتشار 2015