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Abstract

In the present thesis I investigate the relationship between product quality, innovation, and credit constraints in the case of Greek exporting firms. To this end, I develop a simple theoretical framework in which firms choose their product quality considering their credit constraints and the level of their innovative activities. The model predicts that the relationship between product quality and innovation at the firm level is positive when the firm’s innovation expenditures are above a cut-off point that depends on the firm’s level of credit constraints, but it is negative when its innovation expenditures are below this threshold. To test this prediction, I use a unique combined dataset for Greek exporting firms. I infer unobserved product quality at the firm level applying the estimation strategy put forward by Piveteau and Smagghue (2019). With the quality estimates at hand, using data on firm-level R&D expenditure and credit constraints, I find that, consistent with the theoretical model, the relationship between product quality and innovation is positive for low-credit and medium-credit constrained Greek exporters, but is negative for the highly financially-constrained firms.

Publication Type:	Thesis (Doctoral)
Publisher Keywords:	International Trade; Exports; Product Quality; Innovation; Credit Contraints
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HF Commerce
Departments:	Doctoral Theses School of Policy & Global Affairs > Economics School of Policy & Global Affairs > School of Policy & Global Affairs Doctoral Theses

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