Financial resources for research and innovation in small and larger firms: Is it a case of the more you have, the more you do?

Mauricio Perez-Alaniz, Helena Lenihan*, Justin Doran, Nola Hewitt-Dundas

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

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Abstract

Our study analyses how firms’ internal financial resources impact their engagement in scientific research, development, and five innovation activities. Furthermore, we investigate how firm-size moderates the impact of firms’ internal financial resources on scientific research, development, and innovation. Our approach provides novel insights regarding whether more money leads to more research and innovation, a topic that remains highly contested in the literature. Our analysis uses a novel unbalanced panel dataset of 1,446 firms in Ireland, over the period 2008–2016. Levels of internal financial resources are found to positively impact larger-sized firms’ (50+ employees) engagement in scientific research, process innovation and product innovation. However, such resources tend to hinder small-sized firms’ (less than 50 employees) engagement in service and organisational innovation. Our research refines innovation theory by reconciling contrasting views regarding the importance of financial resources for research and innovation, and offers novel insights for informing related public policy interventions.

Original languageEnglish
JournalIndustry and Innovation
DOIs
Publication statusPublished - 27 Feb 2022

Bibliographical note

Funding Information:
This publication has emanated from research conducted with the financial support of Science Foundation Ireland under Grant number 17/SPR/5328. For the purpose of Open Access, the authors have applied a CC BY public copyright license to any Author Accepted Manuscript version arising from this submission.

Publisher Copyright:
© 2022 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.

Keywords

  • D32
  • D83
  • innovation
  • internal financial resources
  • O31
  • O32
  • O33
  • Research and development
  • small firms

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Management of Technology and Innovation

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