Does Innovation Drive Firm Performance? Evidence from Emerging Markets
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Date
2026
Authors
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Journal ISSN
Volume Title
Publisher
Indian Journal of Finance (2026): 29-45
Abstract
Purpose : The purpose of the study was to investigate the role of Research & Development (R&D) through innovation in enhancing a firm’s performance and value among Indian non-financial firms in India.
Design/Methodology/Approach : The present research employed a quantitative methodology, based on a balanced dataset spanning 2010–2011 to 2023–2024 and comprising 335 companies. Dynamic panel regression models were drawn from the generalized method of moments estimation.
Key Findings : The study results showed that R&D significantly increased market performance but negatively impacted short-run profitability. Moreover, Indian non-financial firms had moderate to high profit persistence.
Practical Implications : In a dynamic business environment, R&D investments help to sustain competitive advantage. As such, managers need to strategically manage such investments in light of long-term growth and sustainability. In addition, policymakers should consider implementing incentives to foster innovation through R&D investments among Indian listed non-financial companies.
Originality/Value : This study contributes by investigating the relationship between innovation and firm performance and the value relevance of R&D investments among non-financial firms in India.