Innovation and survival of exporters: A contingency perspective

We challenge the traditional view that innovations always help exporters prosper in competitive international market, by developing and testing the premise that the relationship between innovation and export performance is contingent on some important firm-specific idiosyncrasies. With a large dataset of Chinese firms, the empirical results demonstrate that innovation could be detrimental to exporter survival. Such negative effect is more pronounced for firms that have weak profitability and high outstanding receivables, and also for those without foreign ownership. Nonetheless, we also observe a positive relationship between innovation and survival in highly profitable exporters. By identifying the negative rather than conventionally assumed positive effect of innovation, and the conditions under which innovation facilitates or impedes exporter survival, this paper contributes to the literature on the relationship between innovation and export in the context of emerging markets. Our findings have important implications for how managers develop innovation strategy to compete in the export market.