Panel Data Analysis for Entrepreneurial and Industrial Performance of Indian States

Author(s) : Kumar Ambedkar, Ashish Deepankar
ISSN : 0974 - 497
Year : February 2020 | Volume : 14 | Issue : 1/4

Abstract: Industrial competitiveness of the region attracts entrepreneurial pursuits and entrepreneurship, in turn, drives the economic growth of any country or a region. The evolution of industrial capability for any country takes place over a span of time. Initially, industrial growth is largely driven by the 'factor of production'. The factor productivity fetches investment from outside. The competitiveness now rides on the magnitude of financial investment. Finally, technological innovations ensure the superior industrial performance of the region or a country.
In recent times India has emerged as a prominent player in the world economy. However, not all Indian states are contributing equally in this economic rise. This research paper attempts to understand the Entrepreneurial and Industrial Performance of Indian states that are driving industrial activity. This study tries to reveal the strength of Indian economy, i.e. which one or the combination; factor productivity-financial productivity- innovation productivity is driving industrial growth.
For the first time, this paper has attempted to find out linkages among entrepreneurial activities represented by a number of entrepreneurship memorandum filed, labour productivity described by net value added per unit of the workforce, capital productivity, and innovativeness propensity- depicted as patents filing rate of higher-income Indian states.
Industrial competitiveness reflected by entrepreneurship activity is assumed as dependent variable whereas labour productivity, financial productivity and technological innovation are taken as an independent variable. The panel data analysis of eight different Indian states over a time period of six years using STATA has been carried out. The panel data analysis successfully reveals the relationship among dependent variable, i.e. entrepreneurship activity and independent variables- labour productivity, financial productivity and technological innovation. The study indicates that the high-income Indian States are dependent upon their Technological Innovativeness propensity for attracting entrepreneurial pursuit. The analysis reveals that Innovations are driving new entrepreneurs for fuelling the growth of business environment to ensure the competitiveness of Indian States whereas Financial Productivity and Labour productivity seems to have little significance on entrepreneurship activity in such states. These finding are quite significant- as it comes out that the Indian States are driving their entrepreneurial and industrial performance through Innovations rather than factor of production and investment, the present research practically challenges usually accepted theory of stages of industrial evolution as factor-driven – investment-driven – innovation-driven sequence and therefore, present research findings may create significant policy impact for stakeholders.


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