Product and Process Innovation and the Decision to Export: Firm-Level Evidence for Belgium
Ilke Van Beveren
KULeuven, Department of Economics; KULeuven, CES; UCL, Department of Economics, IRES
Catholic University of Leuven (KUL), LICOS & CEPR
November, 24 2009
LICOS Discussion Paper No. 247/2009
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, we include indicators of both innovative effort (R&D activities) as well as innovative output (product and process innovation). Our 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.
Number of Pages in PDF File: 32
Keywords: Product innovation, Process innovation, Self-selection, Firm heterogeneity
JEL Classification: D24, F14, L25, O31, O33
Date posted: November 25, 2009
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