Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: Existing studies associates financial constraints among innovators to small, young and high-tech firms. High adjustment cost implies that firms save money by smoothing innovation spending across the business cycle if they have available resources. This paper examines whether previous findings on financial constraints can be generalized to exporting firms. To do so, we investigate possible differences in the innovation-cash flow link between high-tech firms and all exporters, creation and exploitation innovation activities, persistent and non-persistent exporters. Applying a modified Euler model and dynamic two-step GMM estimator on close to 7,000 exporting firms in Sweden, the estimation shows that (i) the typical exporter is not financially constrained in any type of innovation activities, (ii) high-tech firms - but only persistent exporters - behave as if they have higher adjustment cost than other firms engaged in knowledge creating activities, and (iii) both persistent and non-persistent exporters in high-tech sector are more financially constrained than the whole group of manufacturing exporters when innovation is measured as knowledge exploitation.

Keywords: innovation; exports; credit constraints; two-step GMM

JEL-codes: F14; G32; O16; O30; O32

24 pages, December 18, 2014

Full text files

cesiswp387.pdf  

Download statistics

• Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Vardan Hovsepyan ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2024-02-21 12:08:39.