Analysis on the Relationship between Financing Constraints and Research and Development from the Perspective of the Location of Top Management Network

Abstract

Taking listed Chinese companies during 2009-2019 as objects, this paper constructs a multivariate discriminant model to measure the degrees of multiple financing constraints and establishes empirical models to analyze the non-linear relationship between the financing constraints and research and development (R&D) investment. Further, the author investigated how the top management network (TMN) location acts on the relationship between financing constraints and R&D investment. The research provides a robust evidence to an inverted U-shaped relationship between the degrees of financing constraints and corporate R&D investment: appropriate financing constraints promote corporate R&D investment; once passing a turning point, excess financing constraints would suppress corporate R&D investment. Besides, it was learned that TMN location positively moderates the financing constraints and R&D investment. In addition, TMN location plays a more obvious regulating role in non-state-owned enterprises (non-SOEs) than in SOEs. The research clarifies the relationship between financing constraints and R&D investment, as well as the moderating role of TMN location. Empirical evidence was provided to help the government reduce credit discrimination and enterprises to widen financing channels and improve innovation capability.