Title: Ownership effects on R&D spending in India: does external borrowing matter?

Authors: Ritika Jain

Addresses: Flat 2A, Centre for Development Studies, Prasanth Nagar, P.O. Medical College, Trivandrum – 695011, Kerala, India

Abstract: State owned enterprises (SOEs) act as economic units when they operate in industries alongside private firms. These enterprises have social objectives since they are owned by the government and economic objectives since they operate in industries. Research and development (R&D) is one of the strategies available to SOEs which is a public good. Thus, against the multidimensional redistributive objective function of the government, R&D acts as a bridge between social and economic objectives of SOEs. The current study focuses on this particular feature for Indian public and private firms. Specifically, R&D expenditure by public sector enterprises and private sector enterprises listed on the National Stock Exchange is compared for 2015. The study employs propensity score matching and regression methods and finds that listed public sector enterprises spend more than the listed private sector enterprises in India. The study also suggests that external borrowing acts as a stronger tool to increase R&D spending for private firms more than the state owned ones..

Keywords: innovation; public ownership; propensity score matching; external borrowing; India.

DOI: 10.1504/IJTLID.2018.093160

International Journal of Technological Learning, Innovation and Development, 2018 Vol.10 No.2, pp.159 - 175

Received: 10 Aug 2017
Accepted: 03 Mar 2018
Published online: 11 Jul 2018 *

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