Access to Finance, Technology Investments and Exporting Decisions of Indian Services Firms
- PDF / 864,007 Bytes
- 28 Pages / 439.37 x 666.142 pts Page_size
- 6 Downloads / 189 Views
Open Access
Access to Finance, Technology Investments and Exporting Decisions of Indian Services Firms Shubin Yang 1 & Chris Milner 2 & Sandra Lancheros 3
& Saileshsingh
Gunessee 4
# The Author(s) 2020
Abstract This study provides fresh empirical evidence on the influence of various financing sources on firms’ technology investments and exporting decisions using a panel of firms from the service sector in India during the period 1999–2010. Allowing both activities to be jointly determined, our results show that the source of finance matters for exporting and investing in technology. Moreover, the importance of different types of finance varies across industries in the service sector. Overall, we find that internal funds and non-conventional sources of finance play an important role for exporting and investing in technology in both modern and traditional services. However, funding from conventional financial markets exerts divergent effects across service industries: while traditional service firms use resources from the banking sector to fund their technological investments, firms in the modern service sector rely more on funds raised through equity markets to support their exporting and technological efforts. These results contribute to the academic literature and policy debate on the importance of financial mechanisms to promote firms’ strategic investment decisions. Keywords Financing sources . Technology investment . Exports . Service firms
1 Introduction Technology investment and exporting have been commonly associated with manufacturing firms, while their importance for service firms have received much less
* Sandra Lancheros [email protected]
1
School of Economics and Business Administration, Central China Normal University, Wuhan 430079, China
2
School of Economics, University of Nottingham, Nottingham NG7 2RD, UK
3
Leeds University Business School, University of Leeds, Leeds LS2 9JT, UK
4
Nottingham University Business School China, University of Nottingham Ningbo China, Ningbo 315100, China
Yang S. et al.
attention in the literature. A reason for this is that traditionally international trade has been mainly dominated by manufactured goods, while services have been largely regarded to be less technological intensive and non-tradable (Francois and Hoekman, 2010). In recent decades, however, the importance of services in promoting growth and boosting new technologies has been increasingly recognised given their expanding share in economic activity. Yet, despite the growing magnitude and importance of technology investment and international trade in services, we know very little about the factors enabling services firms to invest in technology and exporting. In particular, the role of finance to support these investments has been largely underexplored in the literature. This contrasts with a rich body of work for the manufacturing sector, which has recognized the crucial importance of finance to support firms exporting and technological investments.1 Moreover, the extant (smal
Data Loading...
