{"title":"Innovation, asymmetric information and the capital structure of new firms","authors":"Jonathan Taglialatela, Andrea Mina","doi":"10.1080/10438599.2023.2265821","DOIUrl":null,"url":null,"abstract":"ABSTRACTStart-ups are essential contributors to economic development, but they often face several barriers to growth, including access to finance. We study their capital structure in their early years of operation through the lens of Pecking Order Theory, exploring how the pursuit of innovation influences firms’ reliance on different types of finance. Panel analyses of 8273 German start-ups show that innovation activities are relevant predict start-ups’ revealed preferences for finance. Effects on the type and order of financing sources depend on the degree of information asymmetries specific to research and development activities, human capital endowments, and the market introduction of new products and processes. New firms focused on research and development activities and with better human capital are less likely to receive informationally complex finance such as debt and will rely relatively more on owner and equity finance. Mixed evidence is found, instead, on the role of new products or processes. Our results suggest that the traditional pecking order theory does not hold for new firms, implying that owner and external equity play a much more prominent role for such firms. Then, managers and entrepreneurs should consider specific sources of finance and financial instruments in light of their innovative activities.KEYWORDS: Innovationinformation asymmetriesstart-uppecking orderentrepreneurial financeJEL CODES: G32O16O30 Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 For a broader discussion on the relationship between Schumpeterian innovation and firm financial constraints see Hajivassiliou and Savignac (Citation2008), Hottenrott and Peters (Citation2012) and Lahr and Mina (Citation2021).2 Following this perspective, several contributions have explored the effect of innovation on investment selection behaviours in venture capital markets (Audretsch, Bönte, and Mahagaonkar Citation2012; Baum and Silverman Citation2004; Conti, Thursby, and Thursby Citation2013; Conti, Thursby, and Rothaermel Citation2013; Häussler, Harhoff, and Müller Citation2012; Hsu and Ziedonis Citation2013; Mann and Sager Citation2007; Lahr and Mina Citation2016).3 Before 2014 this database was known as KfW/ZEW Start-up Panel.4 The first two years of data (i.e., 2005-2006) only contain information about the firm’s cost, investments and revenues and exclude information on innovation. Therefore, they cannot serve the purpose of this study.5 We stress that our data indicate the types of financing obtained by firms, but contain no information on whether firms have applied for other types of finance and were rejected. In other words, without observation of finance-seeking behaviours, we can only observe the “revealed preferences” of firms.6 The results of simple Logit models are available upon request. All the statistical tests confirmed the better fit of all panel specifications.","PeriodicalId":51485,"journal":{"name":"Economics of Innovation and New Technology","volume":null,"pages":null},"PeriodicalIF":3.2000,"publicationDate":"2023-10-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"2","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Economics of Innovation and New Technology","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1080/10438599.2023.2265821","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 2
Abstract
ABSTRACTStart-ups are essential contributors to economic development, but they often face several barriers to growth, including access to finance. We study their capital structure in their early years of operation through the lens of Pecking Order Theory, exploring how the pursuit of innovation influences firms’ reliance on different types of finance. Panel analyses of 8273 German start-ups show that innovation activities are relevant predict start-ups’ revealed preferences for finance. Effects on the type and order of financing sources depend on the degree of information asymmetries specific to research and development activities, human capital endowments, and the market introduction of new products and processes. New firms focused on research and development activities and with better human capital are less likely to receive informationally complex finance such as debt and will rely relatively more on owner and equity finance. Mixed evidence is found, instead, on the role of new products or processes. Our results suggest that the traditional pecking order theory does not hold for new firms, implying that owner and external equity play a much more prominent role for such firms. Then, managers and entrepreneurs should consider specific sources of finance and financial instruments in light of their innovative activities.KEYWORDS: Innovationinformation asymmetriesstart-uppecking orderentrepreneurial financeJEL CODES: G32O16O30 Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 For a broader discussion on the relationship between Schumpeterian innovation and firm financial constraints see Hajivassiliou and Savignac (Citation2008), Hottenrott and Peters (Citation2012) and Lahr and Mina (Citation2021).2 Following this perspective, several contributions have explored the effect of innovation on investment selection behaviours in venture capital markets (Audretsch, Bönte, and Mahagaonkar Citation2012; Baum and Silverman Citation2004; Conti, Thursby, and Thursby Citation2013; Conti, Thursby, and Rothaermel Citation2013; Häussler, Harhoff, and Müller Citation2012; Hsu and Ziedonis Citation2013; Mann and Sager Citation2007; Lahr and Mina Citation2016).3 Before 2014 this database was known as KfW/ZEW Start-up Panel.4 The first two years of data (i.e., 2005-2006) only contain information about the firm’s cost, investments and revenues and exclude information on innovation. Therefore, they cannot serve the purpose of this study.5 We stress that our data indicate the types of financing obtained by firms, but contain no information on whether firms have applied for other types of finance and were rejected. In other words, without observation of finance-seeking behaviours, we can only observe the “revealed preferences” of firms.6 The results of simple Logit models are available upon request. All the statistical tests confirmed the better fit of all panel specifications.
摘要初创企业是经济发展的重要贡献者,但它们往往面临一些障碍,包括获得融资。我们通过Pecking Order理论的视角来研究企业早期运营的资本结构,探讨创新追求如何影响企业对不同类型融资的依赖。对8273家德国初创企业的面板分析表明,创新活动与初创企业对财务的偏好相关。对融资来源类型和顺序的影响取决于研发活动、人力资本禀赋以及新产品和新工艺的市场引进所特有的信息不对称程度。以研究和发展活动为重点并拥有较好人力资本的新公司不太可能获得信息复杂的融资,如债务,而将相对更多地依赖所有者和股权融资。相反,关于新产品或新工艺的作用,人们发现了各种各样的证据。我们的研究结果表明,传统的优序理论并不适用于新公司,这意味着所有者和外部股权在新公司中发挥了更为突出的作用。然后,管理人员和企业家应根据其创新活动考虑具体的资金来源和金融工具。关键词:创新信息不对称创业订单创业融资代码:G32O16O30披露声明作者未报告潜在利益冲突。注1关于熊彼特式创新与企业财务约束之间关系的更广泛讨论,请参见Hajivassiliou and Savignac (Citation2008)、Hottenrott and Peters (Citation2012)和Lahr and Mina (Citation2021)遵循这一观点,一些贡献探讨了创新对风险资本市场投资选择行为的影响(Audretsch, Bönte, and Mahagaonkar Citation2012;Baum and Silverman Citation2004;Conti, Thursby, and Thursby Citation2013;Conti, Thursby, and Rothaermel Citation2013;Häussler, Harhoff, and m ller Citation2012;《科学通报》2013;Mann and Sager citation; 2007;2 . Lahr and Mina Citation2016)在2014年之前,该数据库被称为KfW/ZEW创业小组。4前两年的数据(即2005-2006年)仅包含有关公司成本,投资和收入的信息,不包括创新信息。因此,它们不能服务于本研究的目的我们强调,我们的数据表明了企业获得的融资类型,但不包含企业是否申请了其他类型的融资并被拒绝的信息。换句话说,如果不观察企业的融资行为,我们只能观察企业的“显性偏好”简单的Logit模型的结果可根据要求提供。所有的统计测试都证实了所有面板规格的更好的拟合。
期刊介绍:
Economics of Innovation and New Technology is devoted to the theoretical and empirical analysis of the determinants and effects of innovation, new technology and technological knowledge. The journal aims to provide a bridge between different strands of literature and different contributions of economic theory and empirical economics. This bridge is built in two ways. First, by encouraging empirical research (including case studies, econometric work and historical research), evaluating existing economic theory, and suggesting appropriate directions for future effort in theoretical work. Second, by exploring ways of applying and testing existing areas of theory to the economics of innovation and new technology, and ways of using theoretical insights to inform data collection and other empirical research. The journal welcomes contributions across a wide range of issues concerned with innovation, including: the generation of new technological knowledge, innovation in product markets, process innovation, patenting, adoption, diffusion, innovation and technology policy, international competitiveness, standardization and network externalities, innovation and growth, technology transfer, innovation and market structure, innovation and the environment, and across a broad range of economic activity not just in ‘high technology’ areas. The journal is open to a variety of methodological approaches ranging from case studies to econometric exercises with sound theoretical modelling, empirical evidence both longitudinal and cross-sectional about technologies, regions, firms, industries and countries.