Innovation and export behaviour at the firm level

This paper considers the role of innovation in determining export behaviour for a sample of UK firms. The sample includes firms which have had a major innovation; based on the SPRU survey of innovations, and are defined as innovating firms. The rest of the sample of made up of non-innovating firms which have not had a major innovation. Export behaviour is defined in a dual way; both as the probability of a firm exporting and the propensity to export of the exporting firms. The former is estimated using a Probit model, and the latter is treated as a truncated estimation. An empirical model of the determinants of export behaviour is estimated; including both firm specific and sector specific characteristics. The determinants are found to vary between innovating and non-innovating firms. Market characteristics appear to have more influence on the export behaviour of non-innovating firms; innovating firms rely more on firm characteristics. The paper concludes that the capacity to innovate changes the performance of the firm with respect to non-innovating firms.

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