TECHNOLOGY PURCHASE, IN-HOUSE R&D, AND PATENTING: AN EMPIRICAL ANALYSIS OF FIRMS IN HIGH- AND MEDIUM-TECHNOLOGY INDUSTRIES IN INDIA

This study examines the relationship between technology purchase, in-house R & D, and patenting activities of firms in India's high- and medium-technology industries. The study is divided into two periods, i.e., 1995-2005 and 2006-2015, based on the pre- and post-product patent amendment(1) act, 2005. We employ a negative binomial model with fixed and random effects to estimate the impact of technology purchase over R & D and patenting activity, respectively. The estimates of the R & D equation suggest a complementary relationship between technology purchase and in-house R & D. However, the estimates of the patents equation suggest a substitute relationship between in-house and technology purchase. Further, we find an inverted U-shaped relationship between in-house R & D, technology purchase, and patenting activities. However, the interaction between in-house R & D and technology purchase positively moderates the nonlinear relationships. Lastly, our estimated result is sensitive to different industries and periods.