Large, well-established firms are more likely to use retained earnings to finance R&D, while small start-up firms are more likely to rely on venture capital.

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Large, well-established firms often have significant retained earnings, which they can use to finance research and development (R&D) internally. In contrast, small start-up firms usually lack substantial internal funds and are more likely to rely on external financing sources, such as venture capital, to support their R&D activities.

Large, Well-Established Firms Are More Likely to Use Retained Earnings