Factors Affecting Firm’s Annual Turnover in Selected Manufacturing Industries of India

Abstract

Purpose: This study makes a comparison of the manufacturing sector and its determinants for India and selected Asian countries. It examines the factors affecting the annual turnover of randomly selected 154 firms in seven different industries of the Indian manufacturing sector.
 Methods: In this study, the firm’s annual turnover is used as a dependent variable. Labor productivity, age, investment on plant & machinery, annual expenditure on marketing, total employees, production technology up-gradation, shortage of skilled workers, skills to improve the process, use of hi-tech tool and technique in production activities, technology transfer abilities, in-house R&D expertise, quality certification, foreign collaboration, waste management capabilities and building capacity of firms are used as independent variables. Regression coefficients of explanatory variables are assessed using linear, log-linear, and non-linear regression models.
 Results: The study concluded that the firm's annual turnover has a significant association with technological development related variables, labor productivity, age, technology transfer abilities, in-house R&D expertise, quality certification, and waste management practices of firms. 
 Implications: It suggests that Indian policymakers need to adopt a strong IPRs, education, and S&T policy in research institutions. India needs to increase R&D expenditure and researchers in research institutions. Research institutions should collaborate with the existing industries to discover more technologies and innovations for the manufacturing sector. All research organizations must set up technology transfer offices to increase technology transfer and commercialization. Furthermore, India needs to set up hi-tech firms to face global challenges.
 Originality: It uses primary data of 154 firms which are collected from seven different industries across Indian states. Thus, the study substantially contributes to the existing literature. 
 Limitations: This study considers seven different industries that have high diversity in socio-economic, science & technological and IPRs related activities, technology transfer, commercialization of technology, and association with research institutions. Therefore, this study cannot provide policy suggestions for a specific industry.
 

Assessing the Performance and Factors Affecting Industrial Development in Indian States: An Empirical Analysis

“…(2019); Singh and Jyoti (2020), have also argued that labor productivity is an essential driver to increase the production scale of manufacturing industries in India. Daharwal and Mishra (2021) also claimed that workforce productivity is necessary to increase the growth of the manufacturing sector in India.…”

“…Kumar and Paul (2019) have investigated the production structure, profitability, and productivity of various industries in the manufacturing sector in India. Goldar and Sharma (2015); Mehta and Rajan (2017); Soni, Mittal, and Kapshe (2017); Singh, Narayanan, and Sharma (2017); Singh and Jyoti (2020) have measured the determinants and factors affecting industries in the Indian manufacturing sector. Sahu and Narayanan (2011) have observed the energy intensity of manufacturing firms.…”

Measuring the Factors Affecting Annual Turnover of the Firms: A Case Study of Selected Manufacturing Industries in India

“…The manufacturing sector significantly contributes to increase the social-economic development of any economy due to several reasons (Kapoor, 2018;Patnaik & Satyaprakash, 2015;Singh & Kumar, 2021). It is the primary source for job creation, especially for those economies which are predominantly based on the agriculture sector and developing countries (Kapoor, 2018;Lewis, 1954;Singh, Ashraf, & Arya, 2019;Singh & Jyoti, 2020;Singh & Kumar, 2021). The manufacturing sector has higher capability to absorb both skilled and unskilled workers as compared to other sectors such as service and agricultural sectors (Kumar & Pattanaik, 2020;Singh & Kumar, 2021).…”

“…Earlier studies have claimed that the manufacturing sector is a prime driver of economic and employment growth in India (Nagaraj, 1994;Singh & Jyoti, 2020). However, over the period, the growth of the manufacturing sector remains stagnated in term of jobs creation and output contribution in India's gross domestic product (GDP), as evident from several studies (Kumar & Pattanaik, 2019;Singh & Kumar, 2022;Thampy & Tiwary, 2021).…”

“…However, over the period, the growth of the manufacturing sector remains stagnated in term of jobs creation and output contribution in India's gross domestic product (GDP), as evident from several studies (Kumar & Pattanaik, 2019;Singh & Kumar, 2022;Thampy & Tiwary, 2021). The reasons for this may be low global value chain, low innovative capability of firms, low R&D intensity of firms, the, ineffective IPRs regime, poor infrastructure, low financial support from banking sector to small firms, stringent and complex labour laws, and low per capita income in India (Biswas & Bandyopadhyay, 2021;Deolalikar & Röller, 1989;Kaur, 2016;Mazumdar, Rajeev, & Ray, 2009;Ray & Saha, 2010;Singh, Ashraf, & Arya, 2019;Singh & Jyoti, 2020;Srivastava & Chandra, 2012). The manufacturing sector of India could contribute around 17.8 percent share in its GDP and 11.8% of total employment of the country in the financial year 2016/2017 (Aggarwal & Goldar, 2019).…”