The relationship between innovation and export behaviour: The case of Galician firms

- We examine the relationship between innovation and exporting from a survey of firms.
- Exporting activity increases when firms are innovative.
- Complementarities among innovation activities (variety) help firms to export more.
- Marketing innovation (sales methods and design) becomes a key factor for exporting.
- Other firm characteristics (size and sector) show a significant effect on exporting.

The aim of this paper is to provide new evidence and findings about the relationship between innovation and export behaviour at micro-level (firm). The study is based on the general hypothesis that innovation has a positive effect on firm competitiveness (opening new markets; increasing productivity; creating new products …). Moreover, it is also based on the complementary assumption that internationalization pushes firms to increase innovation performance (learning-by-exporting hypothesis). From a macroeconomic viewpoint, this bi-directional process leads to improve the trade balance as well as to increase economic growth. Based on such theoretical approach, the main goal of the paper is to analyse the relationship between innovation performance of firms and their export behaviour, as well as the specific factors that influence this relationship. In particular, the research question is to know as to what extent some specific aspects of innovation are relevant when this relationship is analysed.The study combines different variables concerning innovation (R&D and innovation decision, variety of innovation as a measure of engagement in innovation, types of innovation), structural characteristics (size and sector) and export behaviour of firms (decision to export and export intensity, measured by the weight of exports on total sales). The lack of a single behavioural pattern (firm heterogeneity) underlies this analysis.The data come from a survey of 213 firms located in Galicia (north-west region of Spain). The research method combines two levels of analysis. Firstly, a descriptive analysis based on statistics is presented. Secondly, multiple and nonlinear regression (logit and tobit) models are estimated. Conclusions suggest that there are new evidences supporting the existence of a positive relationship between innovation and exporting and that some factors (particularly, variety of innovation and marketing innovation) are critical.