Mercedes Teruel

Small Firms, Growth and Financial Constraints

This paper analyses the impact of different sources of finance on the growth of firms. Using panel data from Spanish manufacturing firms for the period 2000-2006, we investigate the effects of internal and external finances on firm growth. In particular, we examine three dimensions of these financial sources: a) the performance of the firms’ capital structure in accordance with firm size; b) the effects of internal and external financial sources on growth performance; c) the combined effect of equity, external debt and cash flow on firm growth. We find that low-growth firms are sensitive to cash flow and short-term bank debt, while high-growth firms are more sensitive to long-term debt. Furthermore, equity capital seems to reduce barriers to external finance. Our main conclusion is that during the start-up phase, firms are unable to increase their financial leverage and so their capital structure fails to promote correct investment strategies. However, as their equity capital increases, alternative financial mechanisms, in particular long-term debt, become available, which have a positive impact on firm growth.

Financial Constraints and the Failure of Innovation Projects

Theoretical and empirical approaches have stressed the existence of financial constraints in innovative activities of firms. This paper analyses the role of financial obstacles on the likelihood of abandoning an innovation project. Although a large number of innovation projects are abandoned before their completion, the empirical evidence has focused on the determinants of innovation while failed projects have received little attention. Our analysis differentiates between internal and external barriers on the probability of abandoning a project and we examine whether the effects are different depending on the stage of the innovation process. In the empirical analysis carried out for a panel data of potential innovative Spanish firms for the period 2004-2010, we use a bivariate probit model to take into account the simultaneity of financial constraints and the decision to abandon an innovation project. Our results show that financial constraints most affect the probability of abandoning an innovation project during the concept stage and that low-technological manufacturing and non-KIS service sectors are more sensitive to financial constraints.

Productivity and R&D sources: evidence for Catalan firms

This paper draws on a sample of innovative Catalan firms to identify how two main sources of innovation – internal R&D and external R&D acquisition – affect productivity in the manufacturing and service industries. The sample comprises 1612 innovative firms from the fourth European Community Innovation Survey (CIS-4) during the period 2002–2004. We compare empirical results when applying the usual OLS and quantile regression techniques controlling with a non-parametric sample selection. Our results indicate the different patterns that are attributable to the two sources of innovation as we move up from lower to higher conditional quantiles. First, the marginal effect of internal R&D on productivity decreased as we moved up to higher productivity levels. Second, the marginal effect of external R&D acquisition increased as we moved up to higher productivity levels. Finally, empirical results show significant complementarities between internal and external R&D, which are higher for knowledge-intensive service sectors.

Immigration and Firm Growth: Evidence from Spanish Cities

This article analyses the effect of immigration flows on the growth and efficiency of manufacturing firms in Spanish cities. To date, most studies have tended to focus on the effect immigrants have on labour markets at an aggregate level. Here, however, we undertake an exhaustive analysis at the firm level and report conclusive empirical findings. Ten years ago, Spain began to register massive immigration flows, concentrated above all on its most dynamic and advanced regions. Here, therefore, rather than focusing on the impact this has had on Spain’s labour market (changes to the skill structure of the workforce, increase in labour supply, the displacement of native workers, etc.), we examine the arrival of immigrants in terms of the changes this has meant to the structure of the country’s cities and their amenities. Thus, we argue that the impact of immigration on firm performance should not only be considered in terms of the labour market, but also in terms of how a city’s amenities can affect the performance of firms. Employing a panel data methodology, we show that the increasing pressure brought to bear by immigrants has a positive effect on the evolution of labour productivity and wages and a negative effect on the job evolution of these manufacturing firms. In addition, both small and new firms are more sensitive to the pressures of such immigrant inflows, while foreign market oriented firms report higher productivity levels and a less marked impact of immigration than their counterparts. In this paper, we also present a set of instruments to correct the endogeneity bias, which confirms the effect of local immigration flows on the performance of manufacturing firms.

The role of science and technology parks as firm growth boosters: an empirical analysis in Catalonia

ABSTRACT The role of science and technology parks as firm growth boosters: an empirical analysis in Catalonia. Regional Studies. This paper contributes to an understanding of the role played by science and technology parks (STPs) in fostering the growth of firms. Applying a matching procedure, we obtained a database of 170 in-park firms, together with 7190 out-park firms. After applying a fixed-effects quantile regression, the results showed that being located in an STP has a dual effect on firm performance. Although the location in an STP has a positive effect for high-growth firms, it has a negative effect for low-growth firms. Furthermore, among all STPs, the effect for science parks is stronger than that for technological parks.

Innovation and geographical spillovers: new approaches and empirical evidence

ABSTRACT Innovation and geographical spillovers: new approaches and empirical evidence. Regional Studies. This special issue concerns the generation of knowledge and geographical spillovers, and it includes a selection of papers that cover existent research gaps with respect to the role of space in the promotion of knowledge spillovers and innovation. These papers analyse different typologies of innovation processes carried out in several geographical areas and highlight heterogeneities of these processes, after focusing on several determinants in innovation. Empirical results indicate the positive role of geographical spillovers and the importance of accurate matching among firms, in industry and with regard to regional characteristics, in order to ensure the generation of knowledge and innovation.

Gender diversity, R&D teams and patents:An application to Spanish firms

Previous results show that gender diversity increases the probability firms’ innovation. This paper explores the relationship between gender diversity of R&D departments and their capacity to patent. Based on the Spanish Community Innovation Survey between 2004 and 2014, we have applied a two-step procedure control for endogeneity. Our results show that gender diversity affects a firm’s capacity to patent in different manners depending on the coverage of the patents. On the one hand, gender diversity affects OEPM patents negatively, while the impact becomes positive for patents with an international coverage (EPO, USPTO, or PCT). This analysis is relevant in order reveal the dual effect of gender diversity within R&D teams on their capacity to process and register patents.

Application and success of R&D subsidies: what is the role of firm age?

Abstract This article evaluates the propensity of firms to apply for R&D public grants, their capacity for obtaining subsides and how these relate to the firm age. This analysis is particularly relevant in understanding why young firms may be more or less successful in their application for public subsidies. Using data from an extensive database of 19,236 firms in Catalonia, we estimate a maximum likelihood probit model with sample selection. Our results show that firm age does not exert a significant direct impact on the application propensity in R&D public call, but younger firms tend to show a larger propensity to receive an R&D subsidy. They also show that firm age exerts a moderating role through different internal resources. They highlight the need to design R&D public policies that explicitly favour applications by young firms to help overcome their obstacles to innovation.