Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/263158 
Year of Publication: 
2022
Series/Report no.: 
DIW Discussion Papers No. 2014
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
The purpose of this study is to identify whether an innovative company's likelihood of facing financial constraints is different when the company possesses a public procurement contract (PP). Theory suggests that the treatment effects of public procurement, particularly when mediated by the demand-pull effect, may lower a company's funding constraints for innovation. We test this theory and apply extended probit models (eprobit) with treatment and selection to control for an omitted variable bias. Our findings indicate that the treatment effect of PP on the likelihood of facing financial constraints is highly significant and positive. The increased prefunding requirements that usually come along with PP may actually overcompensate the possibly constraint-reducing effects from a demand-pull or certification effect of PP. The treatment effect of PP is particularly strong for internal financial constraints backing the notion, that PP increases the need for upfront funding.
Subjects: 
public procurement
green public procurement
financial constraints
green innovation
sustainable finance
small and medium-sized enterprises
JEL: 
G30
O16
O31
Q56
Document Type: 
Working Paper

Files in This Item:
File
Size
851.92 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.