The impact of debt on firms&rsquo; innovation investment mode:An empirical research on R&amp;D heterogeneity

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Science Research Management ›› 2014, Vol. 35 ›› Issue (10) : 77-85.

The impact of debt on firms’ innovation investment mode:An empirical research on R&D heterogeneity

Xiao Hailian¹, Tang Qingquan², Zhou Meihua²

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Abstract

Financing constraint of innovation is an important topic in investment theory research. Currently, the hottest debate is around the relationship between R&D investment and internal funds, while the external funds constraint has been neglected. Base on heterogeneity, we divide the innovation investments into exploratory innovation and routine innovation using pooled cross-section data and q model, we find that exploratory innovation investment is curtailed by debt financing while routine innovation investment is not. The different sources of debts have different impact on innovation investments: innovation investments are curtailed by bank loan; routine innovation investments are positively related to commercial credits while exploratory innovation investment is not. This paper has important policy implications with respect to firms' R&D strategies and government's R&D subsidies.

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debt financing / sources of debt / innovation investment mode

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Xiao Hailian, Tang Qingquan, Zhou Meihua. The impact of debt on firms’ innovation investment mode:An empirical research on R&D heterogeneity[J]. Science Research Management. 2014, 35(10): 77-85

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