Innovation, Product Sophistication and Export Market Survival: A Study of Indian Manufacturing

The present study investigates the role of innovation on global market survival of Indian manufacturing firms. Specifically, the study examines whether research and development (R&D) investment enables firms to survive longer in export markets and global value chain markets. To achieve this objective, we source information on firms trading behaviour and R&D investments from the CMIE-Prowess database for the period 2001–18. Using a complementary log-log model, we find that firms investing in R&D experience a lower probability of exiting international markets. In addition, multiple sub-sample analysis indicates that importance of R&D becomes even more prominent for small and medium-sized firms. Based on the empirical findings, the study proposed policy suggestions for India.

Innovation, Product Sophistication and Export Market Survival: A Study of Indian Manufacturing