Do Investment and Innovation Boost Export? An Analysis on European Firms

It is widely recognized that innovative firms have an advantage in terms of competitiveness which allow them to successfully operate in global markets. Coincidently, entering and surviving in global markets require additional tangible assets aimed at the expansion of production capacity. This work investigates innovation activities and tangible investments as factors enhancing exporting propensities and performances by the firms. Particularly emphasis is given to product innovation, as it is directly related to the penetration of foreign markets. More in detail, we empirically study a) the relationship between product innovation and export intensity, and b) between tangible investment and export in a large sample of European firms. The analysis controls for internal and external structural characteristics, taking into account that innovative activities, resources devoted to the accumulation of tangible assets, and export intensity are simultaneously determined. The results suggest that both product innovation and tangible investment have a positive and significant impact on the export intensity of firms.