Financing behavior of R&D investments in the emerging markets : the role of alliance and financial system

Alam, MA, Uddin, MM and Yazdifar, H 2017, 'Financing behavior of R&D investments in the emerging markets : the role of alliance and financial system' , R&D Management . (In Press)

[img] PDF - Accepted Version
Restricted to Repository staff only

Download (916kB)
[img] Microsoft Word - Accepted Version
Restricted to Repository staff only

Download (114kB)

Abstract

This paper examines the financing behaviour of R&D investments in emerging markets. Drawing on institutional theory and using panel data of generalized methods of moment (GMM) estimation for a sample of 302 firms from 20 countries during the period 2003-2015, we find that emerging market firms tend to use internal funds for financing R&D investments. Interesting results emerged when the sample was divided as alliance and non-alliance firms, and bank-based and market-based financial systems. The results show that R&D financing behaves differently for alliance and non-alliance firms. Alliance firms use both internal and external funds for R&D investments, while non-alliance firms do not use external funds. We also document that a country’s financial system influences the choice of available sources of finance. Firms from countries that follow a bank-based financial system tend to rely on external funds while firms from countries that follow a market-based financial system depend more on internal funds for financing R&D investments. This study is important as it provides new evidence on financing R&D investments in emerging countries taking into account the institutional arguments of financing choices, and so should guide stakeholders about appropriate sources of R&D financing.

Item Type: Article
Schools: Schools > Salford Business School > Salford Business School Research Centre
Journal or Publication Title: R&D Management
Publisher: Wiley
ISSN: 0033-6807
Depositing User: MA Alam
Date Deposited: 14 Nov 2017 13:53
Last Modified: 14 Nov 2017 14:34
URI: http://usir.salford.ac.uk/id/eprint/44320

Actions (login required)

Edit record (repository staff only) Edit record (repository staff only)

Downloads

Downloads per month over past year