Determinants of Innovation in Selected Manufacturing Firms in India: Role of R&D and Exports

This article examines the determinants of innovation using selected manufacturing firms in India. Our study is based on 190 manufacturing firms which were surveyed from Bengaluru and Hyderabad cities in India. The results based on panel probit model reveal that exports and R&D expenditure positively and significantly affect the innovation in case of manufacturing sector. Other key factors such as import intensity, manager’s prior experience, and conducting training sessions to the employee at firm level do positively affect the innovation activities. However, firm age and capital intensity negatively affect innovation. The results suggest the policymakers to concentrate more on export orientation policies and investing in R&D through subsidising or creating more R&D incentive projects which would significantly boost innovations in India