The Impact of Cash-Flow and the Main Components of the Capital Structure on Innovative Performances of European Firms

Bernardina Algieri, Antonio Aquino, Marianna Succurro

Abstract


This study aims at investigating the impact of cash-flow, the main components of the capital structure, and R&D on innovative performances of firms, for seven EU countries. The analysis is carried out on data taken from the EU-Efige Survey, enriched with accounting data retrieved from the Amadeus Database (Bureau Van Dijk). We consider three measures of innovative performance: product innovations, process innovations and patents. The capital structure of the firms is evaluated through the short-term debt ratio, the long-term debt ratio and the equity to total assets ratio. We also include as explanatory variables in the econometric analysis R&D and a set of other control variables commonly employed in the empirical literature as determinants of firms’ innovative performance. The results reveal that internal financial resources (cash-flows) and R&D have the greatest importance for innovative performances; the availability of long-term bank loans, a significant export propensity and a greater firm size facilitate and stimulate firms to introduce new products and production processes. Some policy implications conclude the study.

Keywords


Innovation; Patent; R&D; Capital structure; Probit model

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References


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DOI: http://dx.doi.org/10.5202/rei.v11i1-2.324

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