Effects of Licensing Reform on Firm Innovation : Evidence from India
The regulatory environment in a country can affect firm performance. This study investigates the impact of a particular regulation, namely license requirements for certain firm activities, on the innovation performance of Indian firms. First it pre...
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| Language: | English |
| Published: |
2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111108090958 http://hdl.handle.net/10986/3643 |
| Summary: | The regulatory environment in a country
can affect firm performance. This study investigates the
impact of a particular regulation, namely license
requirements for certain firm activities, on the innovation
performance of Indian firms. First it presents a model of
firm and industry evolution that explains the dynamics of
multi-product firms. Then, using a firm level panel data
set, it shows that removal of license requirements led to
roughly 5 percentage points faster innovation rates where
innovation is measured as introduction of new product
varieties that had not existed in the market. The results
are robust to inclusion of controls for the other policy
reforms that occurred during the period of licensing reform. |
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