The Role of Financial Constraints in the Firms' Incentives to Innovate

Student: Vorozhischeva Anastasiya

Supervisor: Ksenia Romanovna Gonchar

Educational Programme: Economics (Bachelor)

Year of Graduation: 2021

This study investigates the effects of firms’ financial constraints on innovations in the Russian manufacturing firms. Applying the microestablishment survey data, collected by HSE in 2018, and the framework of CDM-model proposed by Crepon, Duguet & Mairesse (1998) the study shows negative effect of financial constraints on innovation. It was found that high debt ratio reduces R&D spending. While high share of liquid assets increases incentives to innovate. The findings show that effect of interaction of financial variables and third factors (international trade, government support and cooperation with universities) increases positive effect of financial variables (share of fixed assets, debt to fixed assets ratio).

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