The Impact of Foreign Ownership on Research and Development Intensity and Technology Acquisition in Indian Industries: Pre and Post Global Financial Crisis Acquisition in Indian Industries: Pre and Post Global Financial Crisis

26 Pages Posted: 28 Mar 2018

Date Written: March 27, 2018

Abstract

This study examines how interfirm heterogeneities in modes of technology acquisition and technology intensities are linked to firm ownership in India using a panel data set of about 2,000 firms listed on the Bombay Stock Exchange for the period 2003–2014 drawn from the Prowess database of the Center for Monitoring Indian Economy. Foreign ownership is categorized according to the level of control exercised by foreign firms as defined under the Companies Act of India. A comparative analysis of domestic and different categories of foreign firms was conducted for two time periods: (i) the global boom period of 2004–2008, and (ii) the post global financial crisis period of 2008–2014. A horizontal cluster analysis of 3-digit, industry-level data shows that foreign firms cluster in high-technology industries. The propensity score matching analysis, however, reveals that in a matched sample of foreign and domestic firms, majority-owned foreign firms spend less on research and development and more on technology transfers than their local counterparts, demonstrating that the level of equity holdings by a foreign firm matters. There is little evidence of the global financial crisis affecting the relocation of research and development activities to India. An alternative assessment based on panel data regression analysis confirms these findings and validates the propensity score matching results.

Keywords: domestic firms, foreign firms, global financial crisis, local R&D, majority-owned foreign subsidiaries, minority-owned subsidiaries, technology acquisition

JEL Classification: G21, G32, K22, L25

Suggested Citation

Aggarwal, Aradhna, The Impact of Foreign Ownership on Research and Development Intensity and Technology Acquisition in Indian Industries: Pre and Post Global Financial Crisis Acquisition in Indian Industries: Pre and Post Global Financial Crisis (March 27, 2018). Asian Development Bank Economics Working Paper Series No. 35:1. Available at SSRN: https://ssrn.com/abstract=3150620

Aradhna Aggarwal (Contact Author)

University of Delhi ( email )

University Road
Kirti Nagar
Delhi, DE New Delhi 110 007
India

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
10
Abstract Views
121
PlumX Metrics