TECHNOLOGY PURCHASE, IN-HOUSE R&D, AND PATENTING: AN EMPIRICAL ANALYSIS OF FIRMS IN HIGH- AND MEDIUM-TECHNOLOGY INDUSTRIES IN INDIA

Abstract

This study examines the relationship between technology purchase, in-house R&D, and patenting activities of firms in India’s high- and medium-technology industries. The study is divided into two periods, i.e., 1995–2005 and 2006–2015, based on the pre- and post-product patent amendment1act, 2005. We employ a negative binomial model with fixed and random effects to estimate the impact of technology purchase over R&D and patenting activity, respectively. The estimates of the R&D equation suggest a complementary relationship between technology purchase and in-house R&D. However, the estimates of the patents equation suggest a substitute relationship between in-house and technology purchase. Further, we find an inverted U-shaped relationship between in-house R&D, technology purchase, and patenting activities. However, the interaction between in-house R&D and technology purchase positively moderates the nonlinear relationships. Lastly, our estimated result is sensitive to different industries and periods.1The product patent amendment act came into effect with The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs-2005) in India.