The aim of this paper is two-fold. First, we empirically investigate the role of financial constraints on innovation acivities. Second, we examine the significance of non-financial support provided by government on firm innovation. We employ firm-level survey data over the period 2006-2017 for 100 countries. Based on the direct indicators of financial constraints, different estimation methods and addressing the endogeneity concerns, we document that financial constraints have a significant negative impact on firms' innovation activities. Further, we find a positive correlation between government support and the innovative activities of small-medium enterprises; and the impact is more pronounced in the case of financially unconstrained firms.
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