Market Structure, Entry Barriers, and Firms’ R&D Intensity: Panel Data Evidence from Electronics Goods Sector in India

Richa Shukla ()
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Richa Shukla: Birla Institute of Technology and Science-Pilani, K.K. Birla Goa Campus

Journal of Industry, Competition and Trade, 2020, vol. 20, issue 1, No 5, 115-137

Abstract: Abstract This study examines the role of market structure and entry barrier factors on firm-level R&D activity of firms operating in the electronics sector in India. R&D efforts of a firm are distinguished in terms of (a) decision to undertake R&D activities, and (b) firm-level R&D intensity. To analyse (a) we use a Probit model, while the Tobit model is used to explain the inter-firm differences in (b). Using the data from the Prowess database provided by the Centre for Monitoring Indian Economy (CMIE), the analysis was carried out for the time period of 16 years, from 2000 to 2015. The trends point out a large inter-industry variation within this sector in R&D intensity and concentration ratio. For a pooled cross-sectional data of 353 electronic firms, the study finds that lower levels of industry concentration and high set-up cost induce firm-level R&D activity. Further, the study highlights the role of industry size in which the firm operates in decisions related to R&D activities.

Keywords: Electronics sector; R&D intensity; Pooled cross-sectional data; Industry concentration; Set-up cost; Industry size; JEL Classification Codes; L1; L63 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s10842-019-00308-1

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