R&D and the overseas earnings of Indian firms

This article examines the impact of undertaking R&D, a measure of the enhancement of dynamic capabilities, on firms' overseas earnings patterns, for a panel of several thousand Indian firms, for the period from 1991–92 to 2005–06. The results show that undertaking R&D spending is associated with a significant rise in firms' average overseas earnings levels. These results point to the need for materially enhancing the very low levels of R&D undertaken by firms in India.