Does local knowledge spillover matter for firm productivity? The role of financial access and corporate governance

M. Mostak Ahamed, Kul Luintel () and Sushanta K. Mallick

Research Policy, 2023, vol. 52, issue 8

Abstract: Global productivity growth has either stagnated or declined, despite continued technological innovations with the rise of knowledge-intensive intangibles that arise from the growth of knowledge stock (R&D activities). Understanding the root causes of this paradox in the context of growing economies requires an investigation of whether local knowledge diffusion can explain firm-level productivity differences, including key constraining factors like sources of financing or corporate governance structure. Using financial data of 7970 Indian firms over a 20-year period and clustering firms across industries, we assess the impact of R&D stock that is external to the firm through estimating both within (intra) and between (inter) industry spillovers. We find that both R&D and non-R&D-performing firms benefit from ‘between industry’ spillovers. We further show that firms with better access to finance achieve higher productivity, not only through their own R&D capital stock but also via both types of industry-level knowledge spillover. We allow for the two key sources of international spillovers namely import intensity and FDI. While import-intensive firms experience lower productivity, FDI mitigates this adverse productivity effect across knowledge-intensive exporting firms. The paper concludes that financially unconstrained firms and firms with greater corporate board connectedness derive positive industry-level spillover effects, reflecting intra- and inter-industry as domestic spillover or local value-chain effect in the literature on technological innovation.

Keywords: Productivity; R&D; Knowledge spillovers; Intra- and inter-industry spillovers (search for similar items in EconPapers)
JEL-codes: E24 F1 F6 O3 O4 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:52:y:2023:i:8:s004873332300121x

DOI: 10.1016/j.respol.2023.104837

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