'R&D and export performance: exploring heterogeneity along the export intensity distribution'

Abstract

This study analyses the relationship between firm-level innovative effort as measured by R&D expenditures and export intensity. We apply quantile regression techniques to a sample of Italian firms to verify whether R&D expenditures’ effect varies along the conditional distribution of export intensity, after controlling for censoring and endogeneity issues. Empirical findings suggest that the effect of R&D expenditures on export intensity is positive and that firms taking most advantage from R&D activity are in the right tail of the export intensity distribution (from the 70th quantile onwards), that is, those exporting 50% of their sales or more. Overall, the results prove robust to several specification checks and suggest not only that firms’ innovative efforts help explaining heterogeneity in export intensity performance, but also that its positive effect differs across the export to sales ratio distribution. This implies that innovation policy measures might be more effective for firms characterised by a relatively high export intensive margin.