Business Group Effects on the R&D Intensity-Internationalization Relationship: Empirical Evidence from India

We complement the resource-based view of the firm with agency theory in order to explore the link between R&D intensity and degree of internationalization of firms affiliated to Indian business groups. Results from the two-stage least squares panel regression estimation indicate research intensity is positively associated with the firm's degree of internationalization. The relationship is strengthened by the concentration of ownership by family and affiliated business group firms, the board of directors’ professionalization, the wedge between voting and cash-flow rights, and the board interlocks of professional directors; but weakened by the board interlocks of family directors. Implications are discussed.