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R & D Behaviour of Indian Firms: A Stochastic Control Model

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  • L. K. Raut

    (University of California-San Diego)

Abstract

This paper develops a dynamic stochastic model to explain the observed pattern of R&D input choices of Indian private firms in terms of firm size, market structure, and science base. The inputs to the production of technological knowledge are taken to be in house R&D activities, and purchase of technology and know-how from foreign and domestic suppliers. The model is estimated with firm level data from light, petro-chemical, and heavy industries. In all three industries larger firms tend to substitute domestic for foreign purchase of technology and technical knowhow; and in heavy industry, larger firms also do more in-house R&D. Monopoly power of a firm in the light industry has no significant effect on its R&D activities; in the heavy industry, higher monopoly power to a firm reduces its purchase of technology, without affecting other R&D activities; in the petro chemical industry, higher monopoly power to a firm reduces its purchase of technology, but this but this reduction is partially offset by an increase in in-house R&D expenditures.

Suggested Citation

  • L. K. Raut, 1988. "R & D Behaviour of Indian Firms: A Stochastic Control Model," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 23(2), pages 207-229, July.
    • Handle: RePEc:dse:indecr:v:23:y:1988:i:2:p:207-229
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    Cited by:

    1. M. Parameswaran, 2007. "International trade, R & D spillovers and productivity: Evidence from Indian manufacturing industry," Centre for Development Studies, Trivendrum Working Papers 385, Centre for Development Studies, Trivendrum, India.
    2. Rana Hasan, 2000. "The Impact of Imported and Domestic Technologies on Productivity: Evidence from Indian Manufacturing Firms," Economics Study Area Working Papers 06, East-West Center, Economics Study Area.
    3. Raut, Lakshmi K., 1995. "R & D spillover and productivity growth: Evidence from Indian private firms," Journal of Development Economics, Elsevier, vol. 48(1), pages 1-23, October.
    4. Hasan, Rana, 2002. "The impact of imported and domestic technologies on the productivity of firms: panel data evidence from Indian manufacturing firms," Journal of Development Economics, Elsevier, vol. 69(1), pages 23-49, October.
    5. Lakshmi K. Raut, 2017. "Cost-effectiveness, Competitiveness and Export Performance of Indian Private Firms," Studies in Microeconomics, , vol. 5(1), pages 14-34, June.
    6. Lakshmi K. Raut, 2005. "Firm's R & D Behavior Under Rational Expectations," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 40(2), pages 127-144, December.
    7. Vishwasrao, Sharmila & Bosshardt, William, 2001. "Foreign ownership and technology adoption: evidence from Indian firms," Journal of Development Economics, Elsevier, vol. 65(2), pages 367-387, August.
    8. Awadhesh Pratap SINGH, 2016. "Do Technology Spillovers Accelerate Performance of Firms? Unravelling a Puzzle from Indian Manufacturing Industry," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 3, pages 108-120.

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