R&D investment, innovation, and export performance: An analysis of SME and large firms

There is a paucity of literature investigating the simultaneous relationships among R&D, innovation, and exports and assessing the separate roles of R&D and innovation from an empirical perspective. We address this research gap and contribute to the literature by examining the “learning to export” and “learning by exporting” hypotheses in SMEs and large firms. Using instrumental variable (IV) regressions and path analyses, the empirical assessment provides evidence that R&D and innovation should be regarded as two separate constructs. We also find significant mediating effects between R&D and Export via Innovation and between Export and R&D via Innovation only in the large company cohort. SMEs do not show evidence of simultaneity among R&D, innovation, and exporting nor do the results provide support for the “learning by doing” hypothesis in SMEs. Our findings assist in understanding how the variables interact across different firm sizes, which is important for targeted resource support and policies.