R&D, product innovation, and exporting: evidence from UK new technology based firms

Abstract

We examine the relationship between R&D, product innovation, and exporting for a sample of new technology based firms (NTBFs) in the UK. Allowance is made for selection bias and for endogeneity between innovation and exporting. Product innovators are more likely to export, but conditional on entering export markets successful innovation does not increases subsequent export intensity. Lagged productivity is strongly associated with exporting, supporting the view that efficient firms are better able to overcome the barriers to entering export markets. We also find strong evidence of the importance of internal R&D and of supply-chain collaborations in fostering innovation, and that formal commercial collaborations can be important in overcoming the (information) sunk costs of entering export markets. The use of ecommerce does nothing to boost entry into export markets, but the intensity of its use is associated with increased export intensity.

Sectoral Differences in Determinants of Export Intensity

“…We find a positive relationship between R&D expenditure and export intensity, which supports the technology-based model of export performance (Ganotakis, Love 2011). This confirms the result of Roper et al (2006), who report a strong R&D effect for indigenously owned manufacturing plants.…”

“…Firms that invest in product improvement (Ottaviano, Volpe Martincus 2011), and in internal R&D (Ganotakis, Love 2011) have a competitive advantage over their peers and are more likely to enter foreign markets. Similar to Love (2002: 1093), we argue that R&D expenditure is "…an indicator of investment in the resource base of the plant".…”

Capable Companies or Changing Markets? Explaining the Export Performance of Firms in the Defence Industry

“…A large number of empirical contributions rooted in the firm heterogeneity and international trade literature have in the last few years focused on technological innovation as a possible key factor contributing to explain enterprises' export activities (Roper and Love, 2002;Barrios et alia, 2003;Lachenmaier and Wößman, 2006;Aw et alia, 2007;Castellani and Zanfei, 2007;Damian et alia, 2010;Ganotakis and Love, 2011). R&D and innovative investments are expected to enhance firms' export performance for two main reasons.…”

“…due to lack of knowledge of the foreign market, the lack of a distribution network, or knowledge of the local regulatory framework. Cooperation agreements with advanced users in foreign markets do therefore represent a crucial channel to overcome these trade barriers and achieve a competitive position in overseas markets (Castellacci, 2010;Ganotakis and Love, 2011). This general argument is all the more relevant for firms in the defence industry.…”

Knowledge Base, Exporting Activities, Innovation Openness and Innovation Performance: A SEM Approach Towards a Unifying Framework

“…It has been found to contribute to firms' knowledge base expansion (Harris and Li 2009;Gkypali et al 2012) but also to firms' innovation performance (Kafouros et al 2008;Aw et al 2008;Ganotakis and Love 2011).…”