• ISSN: 2010-023X
    • Frequency: Bimonthly
    • DOI: 10.18178/IJTEF
    • Editor-in-Chief: Prof.Tung-Zong (Donald) Chang
    • Executive Editor: Ms. Cherry L. Chen
    • Abstracting/ Indexing:  ProQuest, Crossref, Electronic Journals Library , EBSCO, and Ulrich's Periodicals Directory
    • E-mail: ijtef@ejournal.net
IJTEF 2018 Vol.9(1): 20-24 ISSN: 2010-023X
DOI: 10.18178/ijtef.2018.9.1.582

Product Innovations and R&D public funding: How to Handle Heteroscedasticity and Autocorrelation?

Martha Liliana Torres-Barreto
Abstract—This research was set out to analyze if the consequences of public funding for private R&D activities could be identified and measured through product innovations, and also, which issues should being bear in mind to build up a model that intends to explain such a relationship. As endogeneity was considered as a possibility between R&D public funding and product innovations reached by firms, we used an econometric procedure to test if it was present in the model, but we found no evidence of it. Instead we did found and correct serial autocorrelation and heteroscedasticity within our panel-data model, which consists of 3.500 Spanish firms during the years: 2000-2012. The panel belongs to ESEE (Spanish Annual Firms Strategy Survey). Preliminary findings may indicate that achieving product innovations in the past may influence the goal of obtaining new product innovations by the side of firms. In addition, we found a negative relationship between funding received and product innovations achieved. It may lead us to conclude that an increase on funding received is being used by firms to produce a different type of innovation, rather than the product innovation one. We now leave the floor open for further research that may include new variables in the model, as moderators of the relationship between R&D public funding and product innovations achieved. Another important contribution to literature is based on the use of product innovations as a plausible measure of R&D results, when most of the literature is focused on patents and other bibliometric results.

Index Terms—Public funding, product innovation, heteroscedasticity, endogeneity, autocorrelation.

M. Torres-Barreto is with Universidad Industrial de Santander, Colombia, belongs to the Research Group: Finance & Management (e-mail: mltorres@uis.edu.co).

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Cite: Martha Liliana Torres-Barreto, "Product Innovations and R&D public funding: How to Handle Heteroscedasticity and Autocorrelation?," International Journal of Trade, Economics and Finance vol.9, no.1, pp. 20-24, 2018.

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