Firm size, R&D expenditure, and international orientation: an empirical analysis of performance of Indian firms. (7th April 2020)

• Record Type: Journal Article
• Authors: Sinha, Abhishek Kumar; Mishra, Aswini Kumar; Patel, Yash
• Is Part Of: International journal of technological learning, innovation and development. Volume 11:Number 4(2019)
• Page Start: 311
• Page End: 336
• Publication Date: 2020-04-07
• Subjects: R&D expenditure -- R&D intensity -- firm performance -- firm size -- exports -- S&P BSE index -- industry fixed effects -- year fixed effects -- outward orientation -- quantile regression; Organizational learning -- Periodicals; Technological innovations -- Economic aspects -- Periodicals; Industrial organization -- Technological innovations -- Developing countries -- Periodicals; Diffusion of innovations -- Developing countries -- Periodicals; 338.064091724
• Languages: English
• ISSNs: 1753-1942

Abstract

We examine the Schumpeterian hypothesis that large firms have an advantage in research and development. Using CMIE Prowess data of S&P BSE index, the firms are segregated as per the market capitalisation into large, mid and small cap firms. We analyse the financial performance of these firms for the post-reform period in India (1992-2017). The study finds that the R&D expenditure has statistically significant effects on firms' total income when either fixed industry effects or fixed year effects are taken into account. The income of the firms is also determined by the export earnings and total imports but with less impact than R&D. The results also show that outward-oriented firms have a greater tendency to spend on research and development expenses. Results from quantile regression suggest that the firms in the higher quantile have statistically higher significant effects of R&D expenditure and outward orientation, on firms' total income than the firms in the relatively lower quantile.