Research On Enterprise Module Innovation Investment Decisions With Financing Constraints

As the subject of market activity, enterprise plays an important role in construct creative country and improve ability of independent innovation, must stimulate the enterprise to carry on the technical innovation. However, enterprises always have financing difficulty and high cost of financing. Meanwhile technology innovation investment always high risk, high uncertainty, makes traditional investment methods has useless.Consider technology innovation play a key role in economic transition and traditional investment methods has useless in technology innovation. This paper combined with real options theory and modularity, research the question about enterprises module innovation investment decision when face financing constraints.Comprehensive consideration external financing coefficient, physical assets, market growth rate, module complexity, module technology potential and so on. Use real options method, build the enterprises module innovation investment model, also analysis modularity and market parameter how affect hurdle rate.This paper studies that(1)compared with no financing constraints enterprise,financing constraints encourage enterprises to investment faster, avoid the risk which have no enough money to investment in the future. Pull low the optimal investment test numbers, reduce the quality of products, reduce the level of enterprise innovation.(2)compared with no financing constraints enterprise, enterprise which face financing constraints have the same optimal investment test numbers for max the value of wait options, but the wait option value of face financing constraints enterprise lower than no financing constraints enterprise, the future invest ability of enterprise become uncertainty because of lack of money, so wait with risk.(3)High external financing coefficient and high physical assets, encourage enterprises to investment faster, when enterprise face financing constraints, pull low the optimal investment test numbers.(4)The research of hurdle rate point out, modularity and market parameter will also effect the difference between hurdle rate and enterprise capital cost, different parameter have different effect, the increase of module complexity, market growth rate and market volatility will increase the difference between hurdle rate and enterprise capital cost,module technology potential have no influence.The paper’s results conduce enterprises to choose the best investment decision when face financing constraints.