Firm size, opportunities for adaptation and in-house R&D activity in developing countries: The case of Indian manufacturing

This paper employs Probit and Tobit models to analyse the determinants of probability of undertaking R&D activity and the intensity of R&D expenditures for a sample of 291 Indian manufacturing firms. The empirical findings suggest that the probability of undertaking R&D increases with the firm size only up to a certain level, while R&D intensity increases with it linearly. Competitive pressures, export-orientation and vertical integration influence the firms' inclination to undertake R&D favourably. The technology imports-R&D relation is not dominated by either substitution or complementarity. Firms in chemicals and capital goods industries appear to attach greater importance to R&D because of opportunities available to them for adaptation.