The paper examines the factors influencing R&D in manufacturing companies. On using data on a large sample of public companies in India for 1987–2005, the findings indicate that increases in firm size are likely to be associated with increase in R&D up to a threshold. In terms of magnitudes, increase in size by ‘10 million raises the amount of R&D, on average, increase by ‘0.3 million. The evidence is also supportive of the fact that both the intensity of R&D as well as innovation activity is lower for leveraged firms. Finally, the findings fail to discern any significant improvement in R&D intensity in the post-reform period; although there is a noticeable decline in innovation activity after reforms. Privatisation does not seem to have exerted any perceptible influence on R&D behaviour of public firms.
Acs, Z.J.1988 , ‘Innovation in Large and Small Firms: An Empirical Analysis’, American Economic Review, 78, pp. 678–90.
2.
Aggarwal, A.2000 , ‘Deregulation, Technology Imports and In-House R&D Efforts: An Analysis of the Indian Experience’, Research Policy, 29, pp. 1081–93.
3.
Aghion, P., Klemm A., Bond S. and Marinescu I.2004 , ‘Technology and Financial Structure: Are Innovative Firms Different?’, Journal of the European Economic Association, 2, pp. 277–88.
4.
Arrow, J.K.1962 , ‘The Economic Implications of Learning by Doing’, Review of Economic Studies, 29, pp. 155–73.
5.
Audretsch, D.B. and Acs Z.J.1991 , ‘Innovation and Size at the Firm Level’, Southern Economic Journal, 57, pp. 739–44.
6.
Bah, R., and Dumontier P.2001 , ‘R&D Intensity and Corporate Financial Policy: Some International Evidence’, Journal of Business Finance and Accounting, 28, pp. 671–92.
7.
Baldwin, J., Hanel P. and Sabourin D.2002 , ‘Determinants of Innovative Activity in Canadian Manufacturing Firms,’ in A. Kleinknecht and P. Mohnen, eds, Innovation and Firm Performance: Econometric Explorations of Survey Data. London: Palgrave, Ch. 5, pp. 86–111.
8.
Benito, P.2003 , ‘Choosing Among Alternative Technological Strategies: An Empirical Analysis of Formal Sources of Innovation’, Research Policy, 32, pp. 693–713.
9.
Bartel, A.P. and A.E.Harrison2005 , ‘Ownership Versus Environment: Disentangling the Sources of Public Sector Inefficiency,’ Review of Economics and Statistics, 87, pp. 135–47.
10.
Bound, J., Cummins C., Grilliches Z., Hall B.H. and Jaffe A.1984 , Who Does R&D and Who Patents?, in Z. Grilliches, eds, R&D, Patents and Productivity. Chicago: Chicago Press and NBER.
11.
Buchanan, J.M.1972 , The Theory of Public Choice. University of Michigan Press: Ann Arbor.
12.
Cabagnols, A., and Le Bas C.2002 , ‘Differences in the Determinants of Product and Process Innovations: The French Case’, in A. Kleinknecht and P. Mohnen, eds, Innovation and Firm Performance: Econometric Explorations of Survey Data. London: Palgrave, Ch. 6, pp. 112–49.
13.
Cassiman, B., and Veugelers R.1999 , ‘Make and But in Innovation Strategies: Evidence from Belgian Manufacturing Firms’, Research Policy28, pp. 63–80.
14.
Cohen, W.1995 , ‘Empirical Studies of Innovative Activity’, in P. Stoneman, eds., Handbook of Economics and Technological Change, Blackwell.
15.
Cohen, W., and Levin R.1989 , ‘Empirical Studies of Innovation and Market Structure’, in R. Schmalensee and R. Willig, eds, Handbook of Industrial Organization (Vol. II) Ch. 18, Elsevier Science Publishers, B.V.
16.
Cohen, W., Levin R. and Mowery D.C.1987 , ‘Firm Size and R&D Intensity: A Re-Examination’, Journal of Industrial Economics35, pp. 543–63.
17.
Czarnitzki, D., and Kraft K.2004 , ‘Management control and innovative activity’. Review of Industrial Organization24, pp. 1–24.
18.
David, P.A., B. Hall, and A. Toole2000 , ‘Is Public R&D a Complement or Substitute for Private R&D,’ Research Policy, 29, pp. 1165–83.
19.
DST (Department of Science and Technology) 1984 , Research and Development Statistics 1980–81. New Delhi: Government of India.
20.
DST (Department of Science and Technology) 1999 , Research and Development Statistics 1994–95. New Delhi: Government of India.
21.
DST (Department of Science and Technology) 2004 , Research and Development Statistics 2001–02. New Delhi: Government of India.
22.
Desai, A.V.1985 , ‘Market Structure and Technology: Their Interdependence in India’, Research Policy14, pp. 161–70.
23.
Erikson, R. and A. Pakes1995 , ‘Markov-perfect Industry Dynamics: A Framework for Empirical Work,’ Review of Economic Studies, 62, pp. 53–82.
24.
Government of India 1998 , Public Enterprise Survey. Government of India: New Delhi.
25.
Government of India 2002 , Public Enterprise Survey. Government of India: New Delhi.
26.
Government of India 2003 , Public Enterprise Survey. Government of India: New Delhi.
27.
Government of India 2005 , Union Budget 2005–06, New Delhi: Ministry of Finance.
28.
Government of India Public Enterprise Survey (various years). New Delhi: Government of India.
29.
Gupta, N.2005 , ‘Partial Privatization and Firm Performance’, Journal of Finance60, pp. 987–1015.
30.
Hall, B.H.1990 , ‘The Impact of Corporate Restructuring on Industrial Research and Development’, Brookings Paper on Economic Activity (Microeconomics) 1, pp. 85–135.
31.
Hall, B.H.1999 , ‘Innovation and Market Value’, NBER Working Paper 6984, Cambridge, MA: NBER.
32.
Hall, B.H.2002 , ‘The Financing of Research and Development’, Oxford Review of Economic Policy, 18, pp. 3–51.
33.
Hall, B.H., Grilliches Z. and Hausman J.1986 , ‘Patents and R&D: Is There a Lag?’, International Economic Review, 27, pp. 265–83.
34.
Harris, M., and Raviv A.1991 , ‘The Theory of the Capital Structure’, Journal of Finance, 46, pp. 297–355.
35.
Kartak, H.1985 , ‘Imported Technology, Enterprise Size and R&D in a Newly Industrialising Economy: The Indian Experience’, Oxford Bulletin of Economics and Statistics, 47, pp. 213–30.
36.
Kartak, H.1989 , ‘Imported Technology and R&D in a Newly Industrialising Economy: The Experience of Indian Enterprises’, Journal of Development Economics, 31, pp. 123–39.
37.
Kartak, H.1991 , ‘In House Technological Efforts, Imports of Technology and Enterprise Characteristics in a Newly Industrialising Country: The Indian Experience’, Journal of International Development, 3, 263–76.
38.
Kartak, H.1997 , ‘Developing Countries’ Imports of Technology, In House Technological Capabilities and Efforts: An Analysis of the Indian Experience’, Journal of Development Economics, 53, pp. 67–83.
39.
Kumar, N. and Aggarwal A.2005 , ‘Liberalization, Outward Orientations and In-House R&D Activity of Multinational and Local Firms: A Quantitative Exploration for Indian Manufacturing’, Research Policy, 34, pp. 441–9.
40.
Lall, S.1987 , Learning to Industrialize: The Acquisition of Technological Capability by India. London: McMillan.
41.
Levine, R., and P. Reiss1984 , ‘Test of the Schumpeterian Model of R&D and Market Structure,’ in Z. Grilliches (ed.) R&D, Patents and Productivity. Chicago: University of Chicago Press, pp. 175–208.
42.
McDonald, J.F. and R.A.Moffitt1980 , ‘The Uses of Tobit Analysis,’ Review of Economics and Statistics, 62, pp. 318–21.
43.
Megginson, W.L.2005 , The Financial Economics of Privatization. New York: Oxford University Press.
44.
Munari, F., and Sobrero M.2002 , ‘Privatization’s Effects on R&D Investments’, in Calderini M., Garrone P. and Sobrero M., eds, Corporate Governance, Market Structure and Innovation. Cheltenham: Edward Elgar.
45.
Nelson, R., and Winter S.1982 , The Evolutionary Theory of Economic Change. Cambridge and London: Harvard University Press.
46.
Pakes, A., and Grilliches Z.1984 , ‘Patents and R&D at the Firm Level: A First Look’, in Grilliches Z. eds, R&D, Patents and Productivity. Chicago: Chicago Press and NBER.
47.
Planning Commission 1992 . Sixth Plan Document. New Delhi: Government of India.
48.
Smith, R.2006 , ‘Modeling R&D Investment Levels Based On Corporate Financial Data,’ Research Technology Management49, pp. 16–22.
49.
Tandon, G.L.1999 , ‘Autonomy for PSEs’, Kaleidoscope18, pp. 37–59.
50.
Titman, S., 1984 , The Effect of Capital Structure on a Firm’s Liquidation Decision. Journal of Financial Economics, 13, pp. 137–51.
51.
Vickers, J., and Yarrow G., 1988 , Privatization: An Economic Analysis. Cambridge, MA: MIT Press.
