R&D Spending and Investment Decision: Evidence from European Firms
Title | R&D Spending and Investment Decision: Evidence from European Firms |
Publication Type | Working Paper |
Year of Publication | 2015 |
Authors | Carboni, OA, Medda, G |
Number | 2015_15 |
ISBN Number | 978 88 8467 955 0 |
Keywords | firm behavior, investment, IV model, r&d |
Abstract | This paper investigates the role of research activity and other micro determinants, on firms' investment behaviour. The empirical analysis is based on a large representative and cross-country comparative sample of manufacturing firms across seven European countries. Given the potential simultaneity between investment decision and R&D spending, we used an instrumental variable procedure to overcome the problem of endogeneity and an instrument was constructed to cope with this issue. We find that R&D positively affects investment decisions. The analysis highlights the importance of financial factors, particularly with respect to firms’ internal resources, and also sensible cross-country effects, in determining the investment level. |
Citation Key | 6547 |
Attachment | Size |
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WP15-15.pdf | 1.17 MB |