Template-type: ReDif-Paper 1.0
Author-Name: Hottenrott H. 
Author-Name: Czarnitzki D. 
Author-Name: Hall B.H. 
Author-workplace-name: UNU-MERIT
Title: Patents as quality signals? The implications for financing constraints on R&D
Abstract:  Information about the success of a new technology is usually held  asymmetrically between the research and development RD-performing  firm and potential lenders and investors. This raises the cost of  capital for financing RD externally, resulting in financing constraints  on RD especially for firms with limited internal resources. Previous  literature provided evidence for start-up firms on the role of patents  as signals to investors, in particular to Venture Capitalists. This  study adds to previous insights by studying the effects of firms  patenting activity on the degree of financing constraints on RD for a  panel of established firms. The results show that patents do indeed  attenuate financing constraints for small firms where information  asymmetries may be particularly high and collateral value is low. Larger  firms are not only less subject to financing constraints, but also do  not seem to benefit from a patent quality signal.     Keywords Patents, Quality Signal, Research and Development, Financial  Constraints, Innovation Policy
Keywords: Innovation and Invention: Processes and Incentives; Management of Technological Innovation and R&D; Technological Change: Government Policy; 
Classification-JEL: O31; O32; O38; .
Series:  Working Papers
Creation-Date: 2014
Number: 013
File-URL: http://pub.maastrichtuniversity.nl/3744990c-177f-4533-b246-ef6fc74a1fc8
File-Format: application/pdf
File-Size: 362066
Handle: RePEc:unm:unumer:2014013