Description

In this paper, we use data for more than 5,000 Chilean companies to investigate whether participation in business association increases the probability of R&D investment. Dealing with the endogeneity of participation through a bivariate Probit model with an exclusion variable that captures the trust environment among firms, we find that this probability increases by about 27%. This effect is heterogeneous across firms. Participation increases the probability of R&D investment by 30.8% for SMEs and by 43.9% for those companies with severe financial constraints. Our evidence is consistent with the idea that associativity may help SMEs to close the innovation gap and/or to alleviate financial problems.