DOES INNOVATION OUTCOME INFLUENCE PERFORMANCE OF INDIAN MANUFACTURING FIRMS?

Abstract

This paper investigates the impact of innovation on the performance of selected manufacturing firms in India over the period 2008-2017. Specifically, we emphasize on the role of innovation outcome in terms of number of patents on firms’ performance and consider total factor productivity growth, firms’ growth in terms of total gross sales, and profitability as indicators of firm performance. The results based on the panel Feasible Generalized Least Square estimator shows that the effect of innovation on firms’ performance is positive. Further, the impact of innovation on performance is higher for large firms compared to small firms.