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on Technology and Industrial Dynamics |
| By: | Alex Coad |
| Abstract: | This paper is an empirical test of the hypothesis that the appropriateness of different business strategies is conditional on the firm’s distance to the industry frontier. We use data on four 2-digit high-tech manufacturing industries in the US over the period 1972-1999, and apply semi-parametric quantile regressions to investigate the contribution of firm behavior to market value at various points of the conditional distribution of Tobin’s q. Among our results, we observe that innovative activity, measured in terms of R&D expenditure or patents, has a strong positive association with market value at the upper quantiles (corresponding to the leader firms) whereas the innovative efforts of laggard firms are valued significantly less. Laggard firms, we suggest, should instead achieve productivity growth through efficient exploitation of existing technologies and imitation of industry leaders. Employment growth in leader firms is encouraged whereas growth of backward firms is not as well received on the stock market. |
| Keywords: | Distance to frontier; Strategy; Market value; Innovation; Firm growth |
| JEL: | L25 L21 D21 O31 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:aal:abbswp:08-05&r=tid |
| By: | Czarnitzki, Dirk; Binz, Hanna L. |
| Abstract: | This study tests for financial constraints on R&D investment and how they differ from capital investment. To identify constraints in the access to external capital, we employ a credit rating index. Our models show that internal constraints, measured by mark-ups, are more decisive for R&D than for capital investment. For external constraints, we find a monotonic relationship between the level of constriction and firm size for both types of investment. Thus, external constraints turn out to be more binding with decreasing firm size. On the contrary, we do not find such monotonic relationships for internal constraints. Differentiation by firms’ age does not support lower constraints for older firms. |
| Keywords: | R&D Investment, Capital Investment, Financial Constraints, Panel Data, Censored Regression Models |
| JEL: | O31 O32 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:7357&r=tid |