Impact of patenting on firms' performance: an empirical investigation based on manufacturing firms in India

Abstract

The study aims to estimate the impact of R&D expenditure and patenting on the performance of firms using productivity, profitability and Tobin's q ratio as the performance indicators. The study uses firm-level data of 489 high-and medium-technology firms during the period of 2000-2010. We employ relatively a new source of data particularly in the context of India, firm-level patent granted, that has not been explored earlier. The study finds that firms patenting result in productivity improvement of firms, whereas R&D expenditure does not. The study further finds the evidence of positive impact of patenting on financial performance of firm with significant differences between foreign and domestic firms.

In the Midst of Crisis: Knowledge Assets and Operating Efficiency of Italian Listed Companies

“…In brief, our results partly confirm Ambrammal & Sharma (2016)'s empirical investigation (based on manufacturing firms), finding that firms' patenting (and intellectual property rights) result in productivity and financial performance improvement of firms, whereas R&D does not. The same we may say as for goodwill from business combinations and trademarks / licenses: the value of the going concern acquired, the synergistic element from integration and the commercial power of a brand or of an agreement are all pivotal factors that may facilitate even in difficult situations, by virtue of their powerful features, the business processes and results.…”

Innovation and Firm-level Labour Productivity: A Comparison of Chinese and Indian Manufacturing Based on Enterprise Surveys

“…The results based on Table 3 indicate that although the impact of R&D on labour productivity is positive and significant, the coefficient of innovation is not significant. In case of India, earlier studies by Basant and Fikkert (1996); Sharma (2012); Sharma (2014); Ambrammal and Sharma (2016); Siddharthan and Narayanan (2016); and Seenaiah and Rath (2018) found a positive impact of innovation on firm-level productivity of the Indian manufacturing sector. But the present study did not find any effect of innovation on productivity.…”

Technological innovations and firms’ productivity in new patent regime: Evidences from Indian pharmaceutical industry

“…Both patent and R&D expenditure have positive impact on firms’ productivity (Deolalikar & Röller, 1989; Griliches, 1980; Kamien & Schwartz, 1982). Earlier studies on the innovation were more specific to developed countries (Griliches, 1998; Hall, 2011; Harhoff, 1998; Panda & Sharma, 2019), which later picked up in many developing countries as the innovative activities increases (Ambrammal & Sharma, 2016; Khachoo et al, 2018; Panda & Sharma, 2019; Sharma, 2012; Wadho & Chaudhry, 2018). According to Crépon et al (1998), firms invest in R&D and develop new product and process.…”

“…The MNEs have access to technology developed by their parent organizations that provide them competitive advantage vis‐à‐vis domestic firms (Buckley & Casson, 1976; Rugman & Verbeke, 1992, 2003). Empirical evidences also suggest that innovation performance of MNEs is superior to domestic firms in the Indian manufacturing sector (Ambrammal & Sharma, 2016; Khachoo, Sharma, & Dhanora, 2018). MNEs also have an edge over domestic firms in terms of investment capacity, absorption capacity, technology profile, and productivity score (Cohen & Levinthal, 1989; Patel & Pavitt, 1997; Sharma, 2012).…”

“…Earlier studies like Basant (1997), Ambrammal and Sharma (2016), and Khachoo et al (2018) utilize the similar classification to define MNEs in India. Majority of studies in Indian context utilized R&D expenditure to proxy firm‐level innovation (Basant & Mishra, 2014; Kathuria, 2008; Narayanan, 1998; Sasidharan & Kathuria, 2011; Sharma, Paswan, Ambrammal, & Dhanora, 2018) with little attention on patenting as a measure of innovation (Ambrammal & Sharma, 2016; Chadha, 2009; Deolalikar & Röller, 1989; Dhanora, Sharma, & Jose, 2019). Utilization of R&D does not represent the actual technological capabilities of a firm because many firms in the developing country do not report their R&D and also all the R&D expenditure does not convert into successful innovation.…”