R&D Spillovers and R&D Intensity: A Study of Electronic Goods Sector in India

This paper attempts to analyze the determinants of inter - firm differences in R&D intensity at the five digit level of industries belonging to the Electronics Goods Sector in In dia. Empirical literature mostly focused on the role of technology imports, firm size and age in determining R&D intensity. The extant literature following Cohen and Levinthal (1989) points to the possibility of learning through R&D Spillovers for every fi rm belonging to a specific industry. Using Panel data estimation for the period 2002 - 2014, this paper finds that firms benefitting from R&D Spillovers in their line of business are spending less on in - house R&D activity. The results, however, suggest com plementarity between in - house R&D efforts and R&D Spillovers for select industries within this sector. Age of the firm, representing the learning by doing proposition, turned out with a positive and significant co - efficient. When R&D spillover is consider ed interacting with the age of the firm, we find that older firms that benefit from R&D Spillover appear to be less engaged in in - house R&D efforts. Further, small sized firms appear to be more R&D intensive tha n their larger counterparts, whereas vertically integrated firms are spending less on in - house R&D efforts. The paper highlights the possibilities of benefits appropriated by large and older firms from the availab le pool of R&D Spillovers. Small as well as young firms continue to rely on i n - house R &D for their su rvival and growth . Also, the results clearly point out inter - industry differences, based on product lines, in technological efforts in the electronic goods sector in India.