R&D tax incentive scheme and in-house R&D expenditure: evidences from Indian firms
Journal of Advances in Management Research
ISSN: 0972-7981
Article publication date: 25 November 2019
Issue publication date: 22 June 2020
Abstract
Purpose
The purpose of this paper is to examine the impact of research and development (R&D) tax credit scheme on participating firm’s R&D expenditure in Indian manufacturing firms.
Design/methodology/approach
Tobit model is used to estimate the impact of R&D tax credit scheme on R&D expenditure.
Findings
The results suggest that there is a positive and significant effect of R&D tax incentive scheme on R&D. The introduction of the R&D tax credit scheme and the policy amendment are positively influencing R&D investment of the participating firms. However, industry-specific results suggest that these positive results are mainly driven by electronic and pharmaceutical industries. The study reveals that import of technology, import of raw materials, competition, profitability, age and leverage position of the firm also positively influence the R&D intensity of the firm.
Research limitations/implications
The study is limited to the listed manufacturing firms in India.
Practical implications
The study evaluates the innovation policy to help the policymakers in designing an effective policy.
Originality/value
The paper provides evidence on the impact of R&D tax incentive scheme on firm innovation to explain the factors that contribute to the R&D expenditure of the participating firms. It also summarises the effectiveness of tax incentive scheme on different industry groups and firm size.
Keywords
Citation
Jose, M., Sharma, R. and Dhanora, M. (2020), "R&D tax incentive scheme and in-house R&D expenditure: evidences from Indian firms", Journal of Advances in Management Research, Vol. 17 No. 3, pp. 333-349. https://doi.org/10.1108/JAMR-05-2019-0080
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited