Innovation Capability and Globalization Propensity in India’s Information Technology and Software Industry

Abstract

This article examines the impact of R&D spending on firms’ export earnings patterns, for a panel data set of several Indian information technology and software sector firms, over the period of fiscal years 2000–2001 to 2005–2006. The results of the analysis show that R&D spending has been associated with a significant rise in firms’ average export earnings levels. These results point to the need for a substantial increase over the current levels of R&D currently being undertaken by information technology and software firms in India.