Abstract
Using firm-level data from 7165 firms from Indian manufacturing, this paper explores the effects of firm age and size on its inclination to invest in research and development (R&D). The paper addresses the inadequately answered question on the choice between in-house R&D and technology purchase from foreign firms. To the best of author’s knowledge, this is the first study to examine the impact of age, size and technology transfer on firm’s inclination to invest in R&D for the manufacturing sector in India. Our results suggest that young firms are more likely to invest in R&D. A firm’s exports further increase its propensity towards R&D. Contrary to the previous results, we show that young and small firms possibly use in-house R&D as a complementary input with purchased foreign technology. Thereafter, policy prescriptions are drawn.
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