Regional Heterogeneity and Firms’ Innovation: The Role of Regional Factors in Industrial R&D in India

Abstract

This study makes an early attempt to estimate the magnitude and intensity of manufacturing firms' R&D by Indian states during the period 1991-2008 and analyses the role of regional factors on firm-level R&D activities. As there is little research on state-wise R&D performance of firms in India, this study serves an important contribution to the academic and policy realm. It has brought out the fact the total manufacturing R&D investment in India is unevenly distributed regionally with a few states accounting for disproportionate share of it. Regional heterogeneity or inter-state disparities in R&D has increased between the 1990s and the first decade of the twenty-first century. In view of this persistent regional heterogeneity in R&D, the study has developed and estimated an empirical model for a sample of 4545 Indian manufacturing firms with R&D facilities located in single state and that explicitly includes regional factors as probable factors affecting R&D. The three-step Censored Quantitle Regression results confirm that regional factors play an important role in shaping the R&D intensity of the sample of firms. This led us to some useful policy suggestions for regional governments to promote local firms' R&D activities.

Innovation and firm characteristics: evidence from India’s company-level data

“…A company's annual income, representing its size, access to digital assets, undertaking of sustainability concerns by its management, exposure to the international market through exports and undertaking of R&D expenditures are found to be positively associated with both its promotional expenses and the reported intangible value. A company's age is found to be negatively associated with both promotional Innovation and firm characteristics expenses and the reported intangible value, which remains consistent with earlier literature on innovation and firm-age (see Ghosh, 2009 andPradhan, 2011). Sargan's overidentifying restriction tests suggest that the restrictions are mostly valid.…”

“…Ghosh (2009) suggested that firms with larger size and export orientation have a higher probability of undertaking R&D activities, while firm age has an inverse relation with R&D activities. Pradhan (2011) found age, profit margin, foreign ownership and imported raw materials significantly affect the R&D activities of small and marginal enterprises. Lodh et al (2014) found that family ownership and business groups had a positive impact on innovation.…”

Institutional Distance and Brazilian Outward Foreign Direct Investment

“…Most of the studies focus on the case of Asian multinational companies (MNCs), particularly studies that investigate OFDI from China and India (Buckley et al, M@n@gement 2015, vol. 18(1): 78-101 2007; Cheng & Ma, 2007;De Beule & Van Den Bulcke, 2012;Fung, Garcia-Herrera, & Siu, 2009;Kolstad & Wiig, 2012;Pradhan, 2011). Other studies are more focused on the effect of home country factors on OFDI and the performance of MNCs from emerging economies (Cuervo-Cazurra & Genc, 2011;He & Lin, 2012;Luo, Xue, & Han, 2009).…”