PurposeThe objective of the study is to analyse the impact of research and development investment on the firm performance of “small” scale firms vis-a-vis “medium”-scale firms.Design/methodology/approachThe dataset comprised of a balanced panel of 486 research and development conducting Indian manufacturing small and medium enterprises, constructed for the period of 2006–2017. Fixed Effects, Random Effects Model and Hausmann test were used to analyse the determinants of firm performance in manufacturing small and medium enterprises in India.FindingsIt was found that from firms’ research and development (R&D) investments in terms of performance could be attained if simultaneously internationalisation and higher capital intensity could be achieved.Practical implicationsManagers could pay specific attention to the antecedents of firm performance and calibrate their R&D investment, internationalisation efforts and capital intensity simultaneously to achieve higher growth and productivity. For policymakers, the results provide an insight into how the firms in both categories could be differently incentivised, such that resources are better utilised.Originality/valueThe study analysed the determinants of firm performance in small and medium-sized firms at a disaggregate level as well as at a sectoral level using fixed effects, random effects and lagged effects to arrive at novel results, which have important implications for their competitiveness.
Purpose This paper aims to analyse the impact of innovation on the productivity of firms in India using the data from the World Enterprise Survey. This paper first classifies three different types of innovation measures then further analyses their relation with the productivity of the firms. Design/methodology/approach The methodology used for this study has incorporated the structural Crépon-Douget-Mairesse (CDM) model wherein productivity is measured using both the innovation inputs and the innovation outputs. Three main equations have been used to quantify this relation includes the knowledge intensity function, innovation function and the productivity equation. Findings Findings indicate that decision to invest in research and development (R&D) is influenced negatively by financial obstacles and trade obstacles and positively influenced by telecommunication obstacles, government obstacles and the size of the firm in India. Similarly, financial obstacles and the size of the firm are affecting the firm’s research expenditure per employee. Also, financial obstacles seem to hinder the research intensity and larger firms seem to have higher research intensity. The size of the firm contributes significantly to product innovation. However, R&D spending seems to be negatively related to the innovation outcome. The findings relating to productivity shows neither product nor process innovation outputs, independently are not contributing significantly to the productivity of firms. However, product and process innovation, together serve as innovation outputs is a significant contributor to firm productivity. On the other hand, organisational innovation contributes significantly to the productivity of the firms in a negative manner. Originality/value The findings relating to productivity shows neither product nor process innovation outputs, independently are not contributing significantly to the productivity of firms (which has been measured by sales per worker is impacted by the capital and the labour inputs). However, product and process innovation, together serve as innovation outputs is a significant contributor to firm productivity. On the other hand, organisational innovation contributes significantly to the productivity of the firms in a negative manner. The reason could be due to the fact that the definition of organisational innovation incorporates both dissolutions and mergers.
PurposeThe preference of firm internationalization is shaped by different groups of owners and the institutional environment in which the firm operates. Past studies have largely ignored the heterogeneity among the controlling groups in influencing the internationalization decision in emerging economy firms.Design/methodology/approachIn this study, the authors draw understanding from behavioral risk perspective and institutional theory to inspect the risk perceptions and propensities of various ownership groups such as lending institutions, domestic mutual funds and foreign institutional investors (FIIs). Empirical analysis from a sample of 2695 unique BSE-listed nonfinancial Indian firms during 2005–2019 period were collected using Tobit panel regression analysis.FindingsThe findings reveal that firms' international investments are impacted differently by ownership share of different types of institutional investors after controlling for firm-level resources and capabilities. While lending institutions and FIIs are supportive of foreign investments by firms, domestic mutual funds are not supportive of this strategic decision on foreign investment.Research limitations/implicationsFurther, our results show that family ownership, measured in terms of family shareholding, negatively moderates the lending institutions toward internationalization and does not impact the FIIs and mutual fund investor's decision regarding the foreign investments.Originality/valueTo the best of the author's knowledge, the current paper is the first to address the risk perceptions of various ownership groups on firm's international outlook in an emerging economy context with the latest data. This practical perspective helps the organizations in managing the ownership holdings.
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