The Market Value of R&D in Emerging Economies: Evidence from India

Sunil Kanwar*, Bronwyn H. Hall

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

3 Citations (Web of Science)


We revisit the relationship between market value and innovation in the context of manufacturing firms in a developing country, using data for Indian firms from 2001 through 2010. Surprisingly, we find that financial markets value the R&D investment of Indian firms the same or higher than it values such investment in developed economies such as the United States and European countries, suggesting some degree of underinvestment. The paper explores the use of a proxy for the option value of R&D and finds that this can account for a very small part of the R&D valuation (about 10 %). We also find that the market value–R&D relationship does not vary significantly across industry groups, although these results are rather imprecise.
Original languageEnglish
JournalB E Journal of Economic Analysis & Policy
Issue number1
Publication statusPublished - Feb 2017

JEL classifications

  • o34 - Intellectual Property Rights
  • o32 - Management of Technological Innovation and R&D
  • l60 - Industry Studies: Manufacturing: General


  • market value
  • R&D
  • manufacturing firms

Cite this