Exporting status and success in innovation:
Evidence from Community Innovation
Survey micro data for EU countries
Jože Damijan
Črt Kostevc
Matija Rojec
Outline
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Motivation
Key findings
Data
Estimation strategy
Results
Where to go from here?
Milano, 27-28 February 2013
Institure for Economic
Research, Ljubljana, Slovenia
3
Motivation
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Growing body of empirical literature that looks at the nexus
of trade and innovation activity at the firm level;
Both directions of causality received some empirical support
• innovation improves exporting performance (Wagner, 1996;
Wakelin, 1997, 1998; Ebling and Janz, 1999; Aw et al., 2005,
2009; Girma et al., 2007);
• Firms learn to innovate from being present in exporting markets
Bratti and Felice (2012), Ghazalian (2012), Damijan, Kostevc,
Polanec (2010);
Milano, 27-28 February 2013
Institure for Economic
Research, Ljubljana, Slovenia
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Motivation
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Policy implications are important (stimulate exports to
generate innovation or subsidise R&D to improve export
participation)
Milano, 27-28 February 2013
Institure for Economic
Research, Ljubljana, Slovenia
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Key findings
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systematically positive relationship between export status
and successful innovation (strong effect for product
innovation, weak for organisational);
the impact of exporting is robust to the definition of
innovation, i.e. new-to-firm versus new-to-market innovation;
while innovation success is, in general, increasing in firm size,
we find consistent evidence that exporting performance
exerts the strongest effects on innovation in medium-sized
firms;
Milano, 27-28 February 2013
Institure for Economic
Research, Ljubljana, Slovenia
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Key findings (continued)
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we find that the effects of export status, size and market
concentration on firms’ innovation performance in the new
EU member states to be substantially smaller
The effect of FDI on innovation, on the other hand, is larger
Milano, 27-28 February 2013
Institure for Economic
Research, Ljubljana, Slovenia
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Data
Firm-level data on four most recently available waves of
Community Innovation Survey (CIS) data: CIS III, CIS IV, CIS
2006 and CIS 2008;
• Between 14 and 16 countries surveyed, primarily from CEEC,
but also includes EU-15 countries and several non-EU
countries;
• Data have been annonymized preventing the construction of
a panel dataset and leads to other estimation issues;
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Milano, 27-28 February 2013
Institure for Economic
Research, Ljubljana, Slovenia
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Data
Table 1: CIS sample construction
Milano, 27-28 February 2013
Institure for Economic
Research, Ljubljana, Slovenia
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Data
Table 2: Overview of data characteristics
Milano, 27-28 February 2013
Institure for Economic
Research, Ljubljana, Slovenia
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Data
Table 3: Overview of data characteristics wrt size class
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Institure for Economic
Research, Ljubljana, Slovenia
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Estimation
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We look at the effect of exporting status on different aspects
of innovative activity.
Employ the following general econometric specification:
P(INNitype
=1) = a + b1 expi + b2controlsi + dTi + g I i + hCi + ei
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where we control for firm size, market power, for. ownership,
absorbtive capacity, in-house and external R&D expenditure,
information and co-operation on innovation activities.
Milano, 27-28 February 2013
Institure for Economic
Research, Ljubljana, Slovenia
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Estimation issues
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Data quality
Factor analysis to extract eigenvalues for sources of
innovation information (1) and co-operation (2)
Endogeneity (2-stage IV)
Milano, 27-28 February 2013
Institure for Economic
Research, Ljubljana, Slovenia
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Results
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Baseline (probit) on the complete sample
New-to-market innovations only
Allowing coefficients to vary with size classes
CEEC versus rest of EU
Milano, 27-28 February 2013
Institure for Economic
Research, Ljubljana, Slovenia
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Results recap
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Strong correlation between exporting status and success in
innovation;
The relationship is particularly strong in case of product
innovations and in part marketing innovation;
Size and foreign ownership matter;
In the most general specification R&D has (a quantitatively
small) negative effect on the probability to innovate. The
effect disappears when new-to-market products are
considered;
Market concentration in general leads to less innovation
Milano, 27-28 February 2013
Institure for Economic
Research, Ljubljana, Slovenia
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Results recap (…continued)
Medium sized firms (50-250 employees) appear to benefit
most from exporting status;
• Most effects appear weaker for CEEC countries with
exception of the impact of foreign ownership which, for all
but product innovations, is significantly stronger than in the
remainder of the sample;
• IV estimation (not shown) supports the link between
exporting and innovation status
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Milano, 27-28 February 2013
Institure for Economic
Research, Ljubljana, Slovenia
20
To-dos
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Explore data on cooperation and sources of information
further;
Further robustness tests;
Explain the cross-country differences (sampling, countrycharacteristics,…)
Explore information on R&D subsidies and shares of revenue
due to innovation
Milano, 27-28 February 2013
Institure for Economic
Research, Ljubljana, Slovenia
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