Product And Process Innovation And The Decision To Export: Firm-Level Evidence For Belgium

Date Added: Sep 2009
Format: PDF

Using data from the Community Innovation Survey for Belgium in two consecutive periods, this paper explores the relationship between firm-level innovation activities and the propensity to start exporting. To measure innovation, the authors include indicators of both innovative effort (R&D activities) as well as innovative output (product and process innovation). The results suggest that the combination of product and process innovation, rather than either of the two in isolation, increases a firm's probability to enter the export market. After controlling for potential endogeneity of the innovation activities, only firms with a sufficiently high probability to start exporting engage in product and process innovation prior to their entry on the export market, pointing to the importance of self-selection into innovation.