Financing behaviour of R&D investment in the emerging markets: the role of alliance and financial system

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Authors: Alam, A., Uddin, M. and Yazdifar, H.

http://eprints.bournemouth.ac.uk/33706/

Journal: R and D Management

Volume: 49

Issue: 1

Pages: 21-32

eISSN: 1467-9310

ISSN: 0033-6807

DOI: 10.1111/radm.12303

© 2017 RADMA and John Wiley & Sons Ltd This paper examines the financing behaviour of research and development (R&D) investments in emerging markets. Drawing on institutional theory and using panel data of generalized methods of moment 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.

This data was imported from Web of Science (Lite):

Authors: Alam, A., Uddin, M. and Yazdifar, H.

http://eprints.bournemouth.ac.uk/33706/

Journal: R & D MANAGEMENT

Volume: 49

Issue: 1

Pages: 21-32

eISSN: 1467-9310

ISSN: 0033-6807

DOI: 10.1111/radm.12303

The data on this page was last updated at 05:20 on March 4, 2021.