Emerging Tech

Exporting And Product Innovation At The Firm Level

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Executive Summary

Past research showed that exporters perform better than non-exporters in several domains, micro-level empirical evidence on the innovation enhancing effect of export is, however, very scant. In this paper, the authors analyze the relationship between a firm's export status and its product innovation activity by using a rich firm-level survey on Italian manufacturing. First, they find that the positive effect of exporting on product innovativeness is robust to controlling for many sources of firm's observable heterogeneity and to allowing export activity to be endogenous. Second, they report evidence that the effect of exporting on product innovation is likely to be demand-driven, that is to originate from the interaction between domestic firms and foreign customers.

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