Exporting, R&D investment and firm survival in the Indian IT sector

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Abstract

This paper examines the effect of exporting and R&D investment on firm survival for a panel of Indian IT firms. We show that exporting has competing effects on firm survival. On the one hand, exporting and investing in productivity are complementary activities, while,on the other, exporting activity is an additional source of uncertainty for the firm. We show that both effects influence survival, but operate at different points in time. Specifically, the hazard facing exporters is higher than non-exporters in the initial phase following entry into the export market, reflecting the fact that exporters are particularly vulnerable to shocks in the start-up phase. However, over time, exporters benefit more from productivity gains than non-exporters and the hazard facing exporters falls below that confronting non-exporters.
Original languageEnglish
Pages (from-to)1 - 19
Number of pages19
JournalJournal of Asian Economics
Volume42
DOIs
Publication statusPublished - 2016

Keywords

  • India
  • firm survival
  • information technology
  • R&D
  • exports

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