The determinants of R&D expenditure of firms: Evidence from a cross-section of Indian firms

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This article examines the role of firm size and industry structure on the Research and Development (R&D) intensity of a firm. Taking the 2004 data for a cross-section of Indian firms, we analyse these two areas using the Tobit framework. Using the input-based measurement of R&D initiative, we found that there is an increasing relationship between the size of a firm and the probability of it engaging in R&D activity. The market share and human capital (proxied by wages) also increases the probability of R&D activity. However we failed to find any significant impact of market concentration and export orientation on a firm's R&D intensity.

Original languageEnglish
Pages (from-to)237-248
Number of pages12
JournalEconomic Papers
Issue number3
Publication statusPublished - 1 Sept 2007


  • Firm size
  • India
  • Market concentration
  • R&D intensit
  • Tobit

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