Modeling R&D investment decision of ISE listed firms: A sample selection approach

There are a large number of studies on the drivers of R&D investment, only a few of them deal with “selection bias” problem resulting from performers not being a random sample from the population of firms. As most of the firms especially in developing countries like Turkey , due to market failures and underdeveloped financial markets, do not invest in R&D support policies that induce them to overcome this first obstacle also play a critical role. This paper studies the drivers of R&D activities in non-financial firms listed at Istanbul Stock Exchange by using a panel data at the establishment level for the 1998-2007 periods. Our findings suggest that although SMEs are less likely to conduct R&D, they spend proportionally more on R&D than the LSEs. Moreover, public support has a strong effect in raising R&D intensity of R&D performers.