Export, R&D and new products. a model and a test on European industries

Abstract

In this article we extend the model developed by Pianta (2013a, 2013b) on the link between R&D, innovation and economic performance, considering the impact of innovation of export success. We develop a simultaneous three equation model in order to investigate the existence of a 'virtuous circle' between industries' R&D, share of product innovators and export market shares. We investigate empiricallyat the industry levelthree key relationships affecting the dynamics of innovation and export performance: first, the capacity of firms to translate their R&D efforts in new products; second, the role of innovation as a determinant of export market shares; third, the export success as a driver of new R&D efforts. The model is tested for 38 manufacturing and service sectors of six European countries over three time periods from 1995 to 2010. The model effectively accounts for the dynamics of R&D efforts, innovation and international performances of European industries. Moreover, important differences across countries emerge when we split our sample in a Northern group -Germany, the Netherlands and the United Kingdom and a Southern group -France, Italy and Spain. We find that the 'virtuous circle' between innovation and competitiveness holds for Northern economies only, while Southern industries fail to translate innovation efforts into export success.

Does the position in the inter-sectoral knowledge space affect the international competitiveness of industries?

“…More recently, Guarascio and Pianta (2017) have analyzed the complexity of the so-called "virtuous circles" that link technological innovation, international competitiveness and profit dynamics. Building on previous work (Guarascio et al, 2015(Guarascio et al, , 2016, they stress the relevance of gains from technology (vis-a-vis cost factors) in boosting trade competitiveness, confirming results in Dosi et al (2015).…”

Innovation as a resilience strategy to economic crises for international food and drink firms

“…The promotion of knowledge creation is of considerable benefit for export‐oriented firms, given that innovation and internationalization strengthen each other (Cefis & Marsili, 2019). On the one hand, innovativeness facilitates export intensity (Aw et al, 2011; Constantini & Melitz, 2007; Guarascio et al, 2017), on the other hand, being part of global networks increases innovation propensity (Brancati et al, 2017). Yet, while evidence has been provided for other manufacturing sectors, it is still lacking for the food and drink industry.…”

Strategic determinants of performance of family businesses in the USA and Canada

“…In order for a company to remain competitive amongst other firms in their industry, it is generally accepted that the company must invest in research and development (R&D) to promote their technological innovations (Boso et al, 2013;Guarascio et al, 2016;Makrini, 2015). It is no surprise, therefore, that R&D expenditures are positively correlated with the profitability of a firm in both the current and long term (Liao and Lin, 2017).…”