The effect of patents on financial constraints : an empirical analysis of Norwegian companies 2009-2018
MetadataShow full item record
- Master Thesis 
In this thesis, we investigate the relationship between patenting activity and financial constraints for a broad panel of Norwegian companies between 2009-2018. The research is inspired by Hottenrott, Hall and Czaranitzki (2016). Innovation is considered the key to sustained economic growth. It is however a commonly held belief among economists that R&D investments, and thus R&D active companies, are subject to financial constraints, in large due to asymmetric information. Facilitating for innovation is accordingly an important issue for countries seeking to secure and increase their future prosperity. A goal for the Norwegian government is to increase domestic R&D expenditure to three percent of annual GDP, and it is thus relevant how financial constraints in R&D active companies can be alleviated. Patents have several characteristics that could make it an efficient tool for credibly conveying information and thus mitigate the information asymmetry between innovators and potential lenders or investors. Through a fixed effect regression model, we explore if physical investments in firms with a higher degree of patenting activity are less sensitive to internal liquidity. The findings indicate that patenting activity does have a significant effect on financial constraints in small companies. Similar results are not detected for the full sample, medium or large companies. We do not find evidence supporting that the effect of patenting varies with firm age.