Exporting, R&D Investment and Firm Survival in the Indian IT Sector

Ratbek Dzhumashev, Vinod Mishra and Russell Smyth

No 60-13, Monash Economics Working Papers from Monash University, Department of Economics

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.

Keywords: India; Firm survival; Information Technology; R&D; Exports (search for similar items in EconPapers)
JEL-codes: C41 L25 L86 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2013-07
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Journal Article: Exporting, R&D investment and firm survival in the Indian IT sector (2016)
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