Suppliers Dynamic Approach to Invest in R&D with Sunk Costs in Indian Contexts

Authors

  • Manoj KUMAR International Engineering Services
  • Jyoti RAMAN International Engineering Services
  • Priya RAMAN International Engineering Services

Keywords:

R&D Decision, Persistence, Sunk Costs, Panel Data, Multivariate Dynamic Binary Choice Model

Abstract

In this paper we test for the presence of sunk costs in suppliers’ R&D activities by analyzing the persistence of these activities using supplier level panel data. We develop and estimate a dynamic discrete choice model where each supplier’s current R&D expenditure is a function, among other factors, of its previous experience in performing R&D activities. The data used is a panel data of Indian suppliers, for the period 2003 - 2013. We find that prior R&D experience significantly affects the current decision to invest in R&D, and that, although important, the effect of prior R&D experience depreciates fairly quickly over time.

Published

31-05-2015

How to Cite

KUMAR, M., RAMAN, J., & RAMAN, P. (2015). Suppliers Dynamic Approach to Invest in R&D with Sunk Costs in Indian Contexts. Eurasian Journal of Business and Economics, 8(15), 61-93. Retrieved from https://www.ejbe.org/index.php/EJBE/article/view/143

Issue

Section

Articles