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Determinants of inter-industry variations in research and development efforts in Indian manufacturing sector: a dynamic panel data analysis

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  • Rakesh Basant
  • Pulak Mishra

Abstract

Several studies have explored the determinants of firms' innovative efforts, but a consensus on the conceptual underpinnings and empirical manifestations of these determinants is yet to emerge. This paper attempts to understand the role of several factors in determining inter-industry variations in research and development (R&D) efforts in Indian manufacturing sector. Using Arellano-Bond dynamic panel estimation technique and a panel data set of 34 manufacturing industries over the period from 2001-2002 to 2008-2009, the paper finds that firms in industries with greater R&D efforts in the past, larger participation of the multinational corporations (MNCs), higher capital intensity, and greater penetration in the international market through exports spend more on R&D. On the other hand, R&D efforts are less in industries with larger incidence of mergers and acquisitions (M&A) and greater competition from imports. The degree of sellers' concentration in a market, size of the market, product differentiation, purchase of technology, and the level and variations profitability do not make any significant difference in R&D intensity across industries. Our findings raise some important policy issues relating to encouraging entry of MNCs through Greenfield investments, restricting M&A, and promoting exports.

Suggested Citation

  • Rakesh Basant & Pulak Mishra, 2014. "Determinants of inter-industry variations in research and development efforts in Indian manufacturing sector: a dynamic panel data analysis," Innovation and Development, Taylor & Francis Journals, vol. 4(1), pages 91-109, April.
    • Handle: RePEc:taf:riadxx:v:4:y:2014:i:1:p:91-109
    DOI: 10.1080/2157930X.2014.881078
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    Cited by:

    1. Pulak Mishra & Neha Jaiswal, 2017. "Impact of Mergers and Acquisitions on Firms’ Export Competitiveness," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 18(1), pages 1-20, March.
    2. Madan Dhanora & Ruchi Sharma & Walter G. Park, 2021. "Technological Innovations and Market Power: A Study of Indian Pharmaceutical Industry," Millennial Asia, , vol. 12(1), pages 5-34, April.
    3. Pulak Mishra, 2018. "Are Mergers and Acquisitions Necessarily Anti-competitive? Empirical Evidence from India’s Manufacturing Sector," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 12(3), pages 276-307, August.

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