Research seminar by Prof. Pratik Modi

Posted on March 11, 2026 by administrator

IIM K hosted its ninth research seminar on February 27, 2026, for the year 2025-26. It was conducted by Prof. Pratik Modi, Professor & Dean, Institute of Rural Management Anand (IRMA), “Tribhuvan” Sahkari University, Gujarat.

The topic was Innovation Orientation and Resilience to Macroeconomic Shocks: The Role of Strategic vs. Non-Strategic R&D

Abstract of the talk given below

In a surprise move on November 8, 2016, the Indian government delivered an unanticipated macroeconomic shock by demonetizing high-value currency notes, instantly withdrawing 86% of the currency by value from an economy where almost all consumer payments were cash-based. In the wake of this announcement, the stock market fell by about 6%; however, some firms within the same industries exhibited greater resilience and were able to withstand the shock better than others. Our study seeks to explain the source of this resilience. Using the demonetization as a natural experimental context, the paper shows that firms’ innovation orientation (IO) and strategic R&D mitigate investors’ capital loss following the shock, an effect we term “resilience.” Strategic R&D operates as an endogenous resource-deployment mechanism through which IO delivers this resilience effect, whereas non-strategic R&D does not.

We construct a study dataset by matching administrative data sources with firm-level financial and accounting information for BSE 500 firms in India. The identification strategy relies on instrumental-variable two-stage least squares (IV–2SLS) and dose–response function specifications to uncover both causal effects and the mechanisms through which they operate. The empirical results indicate that the strategic R&D elasticity of abnormal returns is 7.65% on day zero, 13.1% over the first five days, and 10.5% over the first fortnight following demonetization. The findings underscore the importance of IO and strategic R&D in building resilience against macroeconomic shocks and are robust to a wide range of checks, including alternative event windows, alternative data-generating processes, and alternative measurement of key variables.

Keywords: Innovation orientation; R&D; Mitigation of investors’ loss; Resilience; Macroeconomic shock; Demonetization; Strategic orientation