Unleash liquidity constraints or competitiveness potential: The impact of R&D grant on external financing on innovation

Unleash liquidity constraints or competitiveness potential: The impact of R&D grant on external financing on innovation

R&D grant
External financing
Liquidity constraints
Innovation policy

This paper uses Korea’s internal data on R&D programs to analyze how the receiving of R&D impacts the amount of subsequent external financing for technological innovation received by R&D firms. We address sample selection and endogeneity issues that arise when estimating the impact of R&D policy by utilizing a matching method using unique features of Korea’s R&D grant programs. Our empirical results show that firms that receive R&D grants further receive 22%-32% less external financing compared to those who do not
receive R&D grants, though there are some differences in the statistical significance of the results based on the specification of the regression model. This is consistent with the view that R&D grants reduce firms’
liquidity constraints, or that government support effectively crowds out funding from the financial market.

Byunggeor Moon

https://www.sciencedirect.com/journal/european-research-on-management-and-business-economics/vol/28/issue/3

Elsevier Espana, S.L.U

5 February 2022

Sri Wahyuni

ISSN: 2444-8834

PDF

English

Text

Jurnal Internasional European Research on Management and Business Economics 2022