R&D COOPERATION, FINANCIAL CONSTRAINT AND INNOVATION PERFORMANCE

This study investigates whether, and with whom, R&D cooperation can alleviate the adverse influence of financial constraint on firms' innovation performance. Specifically, three different types of R&D cooperation are considered in the study: cooperation with suppliers, with customers and with research institutes. Using the data of manufacturing firms from the Chinese Enterprise Survey, we find that R&D cooperation can effectively improve innovation performance when firms are facing financial constraints. Furthermore, we find that R&D cooperation with customers is more effective than cooperation with suppliers and research institutes in mitigating the negative effect of financial constraint on new product development, while R&D cooperation with suppliers is more effective than cooperation with customers and research institutes in improving technological processes. Overall, our findings provide direct evidence that R&D cooperation can be an effective strategy to improve innovation performance when firms face financial constraints.