IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/28096.html
   My bibliography  Save this paper

Regional heterogeneity and firms’ innovation: the role of regional factors in industrial R&D in India

Author

Listed:
  • Pradhan, Jaya Prakash

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.

Suggested Citation

  • Pradhan, Jaya Prakash, 2011. "Regional heterogeneity and firms’ innovation: the role of regional factors in industrial R&D in India," MPRA Paper 28096, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:28096
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/28096/1/MPRA_paper_28096.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Martin Falk, 2006. "What drives business Research and Development (R&D) intensity across Organisation for Economic Co-operation and Development (OECD) countries?," Applied Economics, Taylor & Francis Journals, vol. 38(5), pages 533-547.
    2. Mark Ottoni Wilhelm, 2008. "Practical Considerations for Choosing Between Tobit and SCLS or CLAD Estimators for Censored Regression Models with an Application to Charitable Giving," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(4), pages 559-582, August.
    3. P Cooke & M G Uranga & G Etxebarria, 1998. "Regional Systems of Innovation: An Evolutionary Perspective," Environment and Planning A, , vol. 30(9), pages 1563-1584, September.
    4. Ishtiaq P. Mahmood & Will Mitchell, 2004. "Two Faces: Effects of Business Groups on Innovation in Emerging Economies," Management Science, INFORMS, vol. 50(10), pages 1348-1365, October.
    5. Tsai, Kuen-Hung & Wang, Jiann-Chyuan, 2008. "External technology acquisition and firm performance: A longitudinal study," Journal of Business Venturing, Elsevier, vol. 23(1), pages 91-112, January.
    6. Joachim Wagner, 2016. "Exports and Productivity: A Survey of the Evidence from Firm Level Data," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 1, pages 3-41, World Scientific Publishing Co. Pte. Ltd..
    7. Bengt-Åke Lundvall, 2007. "National Innovation Systems—Analytical Concept and Development Tool," Industry and Innovation, Taylor & Francis Journals, vol. 14(1), pages 95-119.
    8. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211.
    9. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2004. "Export Versus FDI with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 94(1), pages 300-316, March.
    10. Jaya Prakash Pradhan, 2010. "R&D Strategy of Small and Medium Enterprises in India," EERI Research Paper Series EERI_RP_2010_14, Economics and Econometrics Research Institute (EERI), Brussels.
    11. Reddy, Prasada, 1997. "New trends in globalization of corporate R&D and implications for innovation capability in host countries: A survey from India," World Development, Elsevier, vol. 25(11), pages 1821-1837, November.
    12. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    13. Stefano Usai, 2008. "The Geography of Inventive Activities in OECD Regions," OECD Science, Technology and Industry Working Papers 2008/3, OECD Publishing.
    14. Hagedoorn, John, 1996. "Innovation and Entrepreneurship: Schumpeter Revisited," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 5(3), pages 883-896.
    15. Klaus Desmet & Stephen L. Parente, 2010. "Bigger Is Better: Market Size, Demand Elasticity, And Innovation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(2), pages 319-333, May.
    16. Achim Schmillen & Joachim Möller, 2009. "Determinants of Lifetime Unemployment - A Micro Data Analysis with Censored Quantile Regressions," Working Papers 275, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).
    17. Braga, Helson & Willmore, Larry, 1991. "Technological Imports and Technological Effort: An Analysis of Their Determinants in Brazilian Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 39(4), pages 421-432, June.
    18. Jaya Prakash Pradhan & Neelam Singh, 2009. "Outward FDI and Knowledge Flows: A Study of the Indian Automotive Sector," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 1(1), pages 156-187, June.
    19. repec:bla:rdevec:v:4:y:2000:i:3:p:244-57 is not listed on IDEAS
    20. Hall, Bronwyn H. & Lerner, Josh, 2010. "The Financing of R&D and Innovation," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 609-639, Elsevier.
    21. Breschi, Stefano & Malerba, Franco & Orsenigo, Luigi, 2000. "Technological Regimes and Schumpeterian Patterns of Innovation," Economic Journal, Royal Economic Society, vol. 110(463), pages 388-410, April.
    22. John Cantwell & Lucia Piscitello, 2005. "Recent Location of Foreign-owned Research and Development Activities by Large Multinational Corporations in the European Regions: The Role of Spillovers and Externalities," Regional Studies, Taylor & Francis Journals, vol. 39(1), pages 1-16.
    23. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2003. "Links and Impacts: The Influence of Public Research on Industrial R&D," Chapters, in: Aldo Geuna & Ammon J. Salter & W. Edward Steinmueller (ed.), Science and Innovation, chapter 4, Edward Elgar Publishing.
    24. David, Paul A. & Hall, Bronwyn H. & Toole, Andrew A., 2000. "Is public R&D a complement or substitute for private R&D? A review of the econometric evidence," Research Policy, Elsevier, vol. 29(4-5), pages 497-529, April.
    25. Powell, James L., 1986. "Censored regression quantiles," Journal of Econometrics, Elsevier, vol. 32(1), pages 143-155, June.
    26. Gustavsen, Geir Waehler & Jolliffe, Dean & Rickertsen, Kyrre, 2008. "Censored Quantile Regression and Purchases of Ice Cream," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6534, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    27. Henrik Braconier, 2000. "Do Higher Per Capita Incomes Lead to More R&D Expenditure?," Review of Development Economics, Wiley Blackwell, vol. 4(3), pages 244-257, October.
    28. Jaya Prakash Pradhan, "undated". "Growth of Indian Multinationals in the World Economy: Implications for Development," Working Papers 0704, Institute for Studies in Industrial Development (ISID).
    29. Prabir De & Buddhadeb Ghosh, 2005. "Effects of infrastructure on regional income in the era of globalization: new evidence from South Asia," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 12(1), pages 81-107, June.
    30. Meng-Chun Liu & Shin-Horng Chen, 2003. "International R&D Deployment and Locational Advantage: A Case Study of Taiwan," NBER Working Papers 10169, National Bureau of Economic Research, Inc.
    31. Shimizutani, Satoshi & Todo, Yasuyuki, 2008. "What determines overseas R&D activities? The case of Japanese multinational firms," Research Policy, Elsevier, vol. 37(3), pages 530-544, April.
    32. Cantwell, John & Piscitello, Lucia, 2002. "The location of technological activities of MNCs in European regions: The role of spillovers and local competencies," Journal of International Management, Elsevier, vol. 8(1), pages 69-96.
    33. Cheung Kui-yin & Lin, Ping, 2004. "Spillover effects of FDI on innovation in China: Evidence from the provincial data," China Economic Review, Elsevier, vol. 15(1), pages 25-44.
    34. Saibal Ghosh, 2009. "R&D in Indian manufacturing enterprises: what shapes it?," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 18(4), pages 337-352.
    35. Subodh Kandamuthan, 2002. "Market Concentration, Firm Size and Innovative Activity: A Firm-level Economic Analysis of Selected Indian Industries under Economic Liberalization," WIDER Working Paper Series DP2002-108, World Institute for Development Economic Research (UNU-WIDER).
    36. Azele Mathieu & Bruno van Pottelsberghe de la Potterie, 2010. "A Note on the Drivers of R&D Intensity," Research in World Economy, Research in World Economy, Sciedu Press, vol. 1(1), pages 56-65, November.
    37. Geroski, P A, 1990. "Innovation, Technological Opportunity, and Market Structure," Oxford Economic Papers, Oxford University Press, vol. 42(3), pages 586-602, July.
    38. Mercedes Gumbau-Albert & Joaquin Maudos, 2009. "Patents, technological inputs and spillovers among regions," Applied Economics, Taylor & Francis Journals, vol. 41(12), pages 1473-1486.
    39. Myriam Mariani, 2002. "Next to Production or to Technological Clusters? The Economics and Management of R&D Location," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 6(2), pages 131-152, May.
    40. Sharon Belenzon & Tomer Berkovitz, 2010. "Innovation in Business Groups," Management Science, INFORMS, vol. 56(3), pages 519-535, March.
    41. Giammario Impullitti & Omar Licandro, 2018. "Trade, Firm Selection and Innovation: The Competition Channel," Economic Journal, Royal Economic Society, vol. 128(608), pages 189-229, February.
    42. Rajah Rasiah, 2007. "Export Orientation and Technological Intensities in Auto Parts Firms in East and Southeast Asia: Does Ownership Matter?," Asian Economic Papers, MIT Press, vol. 6(2), pages 55-76, Spring/Su.
    43. Amiti, Mary, 1998. "New Trade Theories and Industrial Location in the EU: A Survey of Evidence," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 14(2), pages 45-53, Summer.
    44. Malerba, Franco, 2002. "Sectoral systems of innovation and production," Research Policy, Elsevier, vol. 31(2), pages 247-264, February.
    45. David Doloreux & Saeed Parto, 2004. "Regional Innovation Systems: Current Discourse and Challenges for Future Research," ERSA conference papers ersa04p56, European Regional Science Association.
    46. Alan Hughes, 2006. "University Industry Linkages and UK Science and Innovation Policy," Working Papers wp326, Centre for Business Research, University of Cambridge.
    47. Lall, Sanjaya, 1983. "Determinants of R&D in an LDC : The Indian engineering industry," Economics Letters, Elsevier, vol. 13(4), pages 379-383.
    48. Redding, Stephen, 1996. "The Low-Skill, Low-Quality Trap: Strategic Complementarities between Human Capital and R&D," Economic Journal, Royal Economic Society, vol. 106(435), pages 458-470, March.
    49. Robert M. Salomon & J. Myles Shaver, 2005. "Learning by Exporting: New Insights from Examining Firm Innovation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(2), pages 431-460, June.
    50. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    51. Kumar, Nagesh & Aggarwal, Aradhna, 2005. "Liberalization, outward orientation and in-house R&D activity of multinational and local firms: A quantitative exploration for Indian manufacturing," Research Policy, Elsevier, vol. 34(4), pages 441-460, May.
    52. Lin, Hwan C., 2010. "Technology diffusion and global welfare effects: Imitative R&D vs. South-bound FDI," Structural Change and Economic Dynamics, Elsevier, vol. 21(4), pages 231-247, November.
    53. James Simmie & Ron Martin, 2009. "The economic resilience of regions: towards an evolutionary approach," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 3(1), pages 27-43.
    54. Furman, Jeffrey L. & Porter, Michael E. & Stern, Scott, 2002. "The determinants of national innovative capacity," Research Policy, Elsevier, vol. 31(6), pages 899-933, August.
    55. Birdsall, Nancy & Rhee, Changyong, 1993. "Does results and development (R&D) contribute to economic growth in developing countries?," Policy Research Working Paper Series 1221, The World Bank.
    56. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    57. Choi, E. Kwan & Harrigan, James, 2003. "Handbook of International Trade," Staff General Research Papers Archive 11375, Iowa State University, Department of Economics.
    58. Malerba, Franco & Orsenigo, Luigi, 1995. "Schumpeterian Patterns of Innovation," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 19(1), pages 47-65, February.
    59. Demurger, Sylvie, 2001. "Infrastructure Development and Economic Growth: An Explanation for Regional Disparities in China?," Journal of Comparative Economics, Elsevier, vol. 29(1), pages 95-117, March.
    60. Fishman, Arthur & Rob, Rafael, 1999. "The Size of Firms and R&D Investment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 915-931, November.
    61. Liu, Xiaohui & Buck, Trevor, 2007. "Innovation performance and channels for international technology spillovers: Evidence from Chinese high-tech industries," Research Policy, Elsevier, vol. 36(3), pages 355-366, April.
    62. Katrak, Homi, 1985. "Imported Technology, Enterprise Size and R&D in a Newly Industrializing Country: The Indian Experience," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 47(3), pages 213-229, August.
    63. Chiara Del Bo & Massimo Florio & Giancarlo Manzi, 2010. "Regional Infrastructure and Convergence: Growth Implications in a Spatial Framework," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 17(3), pages 475-493, September.
    64. Malerba, Franco & Orsenigo, Luigi, 1996. "Schumpeterian patterns of innovation are technology-specific," Research Policy, Elsevier, vol. 25(3), pages 451-478, May.
    65. Pradhan, Jaya Prakash, 2003. "Liberalization, Firm Size and R&D performance: A Firm Level Study of Indian Pharmaceutical Industry," MPRA Paper 17079, University Library of Munich, Germany.
    66. Sea-Jin Chang & Chi-Nien Chung & Ishtiaq P. Mahmood, 2006. "When and How Does Business Group Affiliation Promote Firm Innovation? A Tale of Two Emerging Economies," Organization Science, INFORMS, vol. 17(5), pages 637-656, October.
    67. Jože P. Damijan & Črt Kostevc & Sašo Polanec, 2010. "From Innovation to Exporting or Vice Versa?," The World Economy, Wiley Blackwell, vol. 33(3), pages 374-398, March.
    68. Kenneth Y. Chay & James L. Powell, 2001. "Semiparametric Censored Regression Models," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 29-42, Fall.
    69. Hong H. & Chernozhukov V., 2002. "Three-Step Censored Quantile Regression and Extramarital Affairs," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 872-882, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Amber Naz & Annekatrin Niebuhr & Jan Peters, 2015. "What’s behind the disparities in firm innovation rates across regions? Evidence on composition and context effects," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 55(1), pages 131-156, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pradhan, Jaya Prakash, 2010. "R&D strategy of small and medium enterprises in India: Trends and determinants," MPRA Paper 20951, University Library of Munich, Germany.
    2. Georgios Efthyvoulou & Priit Vahter, 2016. "Financial Constraints, Innovation Performance and Sectoral Disaggregation," Manchester School, University of Manchester, vol. 84(2), pages 125-158, March.
    3. Jaya Prakash Pradhan & Mohammad Zohair & Mallikarjun V. Alagawadi, 2013. "Regional Policies, Firm Characteristics and Exporting in the Indian State of Karnataka," Foreign Trade Review, , vol. 48(1), pages 45-81, February.
    4. Bettina Becker, 2013. "The Determinants of R&D Investment: A Survey of the Empirical Research," Discussion Paper Series 2013_09, Department of Economics, Loughborough University, revised Sep 2013.
    5. Richard Harris & John Moffat, 2011. "R&D, Innovation and Exporting," SERC Discussion Papers 0073, Centre for Economic Performance, LSE.
    6. Claudio Fassio, 2018. "Export-led innovation: the role of export destinations," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 27(1), pages 149-171.
    7. Dosi, Giovanni & Nelson, Richard R., 2010. "Technical Change and Industrial Dynamics as Evolutionary Processes," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 51-127, Elsevier.
    8. Massimiliano Bratti & Giulia Felice, 2012. "Are Exporters More Likely to Introduce Product Innovations?," The World Economy, Wiley Blackwell, vol. 35(11), pages 1559-1598, November.
    9. Zhenzhen Xie & Jiatao Li, 2018. "Exporting and innovating among emerging market firms: The moderating role of institutional development," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(2), pages 222-245, February.
    10. Movahedi, Mohammad & Gaussens, Olivier, 2011. "Innovation, productivity, and export: Evidence from SMEs in Lower Normandy, France," MPRA Paper 40443, University Library of Munich, Germany, revised 07 Jun 2012.
    11. Martijn Boermans & Hein Roelfsema, 2015. "The Effects of Internationalization on Innovation: Firm-Level Evidence for Transition Economies," Open Economies Review, Springer, vol. 26(2), pages 333-350, April.
    12. Francisco J. Santos-Arteaga & Celia Torrecillas & Madjid Tavana, 2019. "Dynamic effects of learning on the innovative outputs and productivity in Spanish multinational enterprises," The Journal of Technology Transfer, Springer, vol. 44(1), pages 97-131, February.
    13. Chih-Hai Yang, 2018. "Exports and innovation: the role of heterogeneity in exports," Empirical Economics, Springer, vol. 55(3), pages 1065-1087, November.
    14. Fassio, Claudio, 2015. "Export-Led Innovation Among European Firms. Demand and Technological Learning Effects," LEAP Working Papers 2015/2, Luiss Institute for European Analysis and Policy.
    15. Swati Mehta, 2014. "Strategies of Technology Accumulation by Indian Pharmaceutical Firms: A Multinomial Logit Analysis," Millennial Asia, , vol. 5(1), pages 67-87, April.
    16. Christopher F. Baum & Mustafa Caglayan & Oleksandr Talavera, 2016. "R&D Expenditures and Geographical Sales Diversification," Manchester School, University of Manchester, vol. 84(2), pages 197-221, March.
    17. Fulvio Castellacci, 2007. "Technological regimes and sectoral differences in productivity growth ," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 16(6), pages 1105-1145, December.
    18. Pradhan, Jaya Prakash & Zohair, Mohammad, 2014. "Subnational Export Performance and Determinants: Evidence from Two Indian States," MPRA Paper 60029, University Library of Munich, Germany.
    19. Peters, Bettina & Riley, Rebecca & Siedschlag, Iulia & Vahter, Priit & McQuinn, John, 2014. "Innovation and Productivity in Services:Evidence from Germany, Ireland and the United Kingdom," Papers WP480, Economic and Social Research Institute (ESRI).
    20. Movahedi, Mohammad & Shahbazi, Kiumars & Gaussens, Olivier, 2017. "Innovation and willingness to export: Is there an effect of conscious self-selection?," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 11, pages 1-22.

    More about this item

    Keywords

    Regional heterogeneity; R&D; manufacturing firms; Indian states; censored quantitle regression.;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:28096. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.