KTH/CESIS Working Paper Series in Economics and Institutions of Innovation
Sources of Finance, R&D Investment and Productivity: Correlation or Causality?
() and Almas Heshmati
Abstract: In general there is agreement about the positive impacts
of R&D on performance of firms measured as productivity, profitability and
growth. However, the opposite relationship is less obvious and very little
attention has been paid on examining the feedback from performance on
investment. This study is an attempt to contribute to the empirical
analysis of the causal relationship between investment and performance. We
examine the interaction between a number of financial indicators
represented by investments in R&D and tangible capital and a number of
performance variables including sales, value added, profit, cash flow,
capital structure and employment on R&D and physical capital investments.
Empirical results are based on a large panel data set of Swedish
manufacturing firms over the period 1992-2000. The results show evidence of
weak feedback effects from performance on investment.
Keywords: R&D Investsments; Productivity; Financial constraints; Panel Data; (follow links to similar papers)
JEL-Codes: C23; C33; G32; L19; O33; (follow links to similar papers)
25 pages, September 24, 2004
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- This paper is forthcoming as:
Lööf, Hans and Almas Heshmati, 'Sources of Finance, R&D Investment and Productivity: Correlation or Causality?', ICFAI Journal of Industrial Economics.
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