Product and Process Innovation and the decision to Export: Firm-level evidence for Belgium

Using data from the Community Innovation Survey for Belgium in two consecutive periods, this paper explores the relationship between firm-level innovation activities and the propensity to start exporting. To measure innovation, we include indicators of both innovative effort (R&D activities) as well as innovative output (product and process innovation). Our results suggest that the combination of product and process innovation, rather than either of the two in isolation, increases a firm’s probability to enter the export market. After controlling for potential endogeneity of the innovation activities, only firms with a sufficiently high probability to start exporting engage in product and process innovation prior to their entry on the export market, pointing to the importance of self-selection into innovation.Exports, Product innovation, Process innovation, Self-selection, Firm heterogeneity

Product and process innovation and the decision to export : firm-level evidence for Belgium

Using data from the Community Innovation Survey for Belgium in two consecutive periods, this paper explores the relationship between firm-level innovation activities and the propensity to start exporting. To measure innovation, we include indicators of both innovative effort (R&D activities) as well as innovative output (product and process innovation). Our results suggest that the combination of product and process innovation, rather than either of the two in isolation, increases a firm’s probability to enter the export market. After controlling for potential endogeneity of the innovation activities, only firms with a sufficiently high probability to start exporting engage in product and process innovation prior to their entry on the export market, pointing to the importance of self-selection into innovationexports, product innovation, process innovation, self-selection, firm heterogeneity

Product and process innovation and the decision to export.

Using data from the Community Innovation Survey for Belgium in two consecutive periods, this paper explores the relationship between firm-level innovation activities and the propensity to start exporting. To measure innovation, we include indicators of both innovative effort (R&D activities) as well as innovative output (product and process innovation). Our results suggest that the combination of product and process innovation, rather than either of the two in isolation, increases a firm’s probability to enter the export market. After controlling for potential endogeneity of the innovation activities, only firms with a sufficiently high probability to start exporting engage in product and process innovation prior to their entry on the export market, pointing to the importance of self-selection into innovation.Exports; Process innovation; Product innovation; Self-selection;

Using proxy variables to control for unobservables when estimating productivity: A sensitivity analysis

The use of proxy variables to control for unobservables when estimating a production function has become increasingly popular in empirical works in recent years. The present paper aims to contribute to this literature in three important ways. First, we provide a structured review of the different estimators and their underlying assumptions. Second, we compare the results obtained using different estimators for a sample of Spanish manufacturing firms, using definitions and data comparable to those used in most empirical works. In comparing the performance of the different estimators, we rely on various proxy variables, apply different definitions of capital, use alternative moment conditions and allow for different timing assumptions of the inputs. Third, in the empirical analysis we propose a simple (non-graphical) test of the monotonicity assumption between productivity and the proxy variable. Our results suggest that productivity measures are more sensitive to the estimator choice rather than to the choice of proxy variables. Moreover, we find that the monotonicity assumption does not hold for a non-negligible proportion of the observations in our data. Importantly, results of a simple evaluation exercise where we compare productivity distributions of exporters versus non-exporters shows that different estimators yield different results, pointing to the importance of making suitable timing assumptions and choosing the appropriate estimator for the data at hand.Total factor productivity, Semiparametric estimator, Simultaneity, Timing assumptions, Generalized Method of Moments

Multinational ownership and R&D intensity: The role of external knowledge sources and spillovers.

This paper analyzes the drivers of multinational affiliates’ R&D intensity, using a unique dataset based on the fourth Community Innovation Survey for Belgium. Specifically, we investigate the role of foreign affiliates’ local (host country) embeddedness and of host country spillovers on foreign affiliates’ research efforts. Our findings show that foreign affiliates who are able to tap into local knowledge sources demonstrate a higher research intensity, compared to firms lacking such access. Links to clients and public research institutions, in particular, have a powerful impetus on the research effort by foreign subsidiaries. Our findings suggest a complementary relationship between foreign firms’ R&D intensity and the internal research efforts of their competitors as a result of demonstration effects, while the use of external R&D by competitors has a negative impact on the research effort of foreign affiliates as a result of technological spillovers. Our findings have important policy implications, especially in terms of the high dependency of the Belgian economy on foreign R&D. One way to attain the R&D intensity put forward by the Lisbon agenda would be to increase public expenditure on research and development, which would also indirectly increase the research intensity of (foreign) firms.R&D intensity; Multinational ownership; Knowledge sources; Spillovers;

Product innovation and renewal: Foreign firms and clusters in Belgium.

Using the cluster definitions of the European Cluster Observatory, this paper investigates the link between cluster membership and firm-level product innovation and renewal; using data from the Community Innovation Survey for Belgium. Clustered firms account for 71 percent of total product renewal generated in 2004 and for 53 percent of product innovators; compared to 29 and 47 percent for non-clustered firms, respectively. Furthermore, cluster membership is shown to be conducive to firm-level product innovation and renewal once firm size, export intensity and research inputs are taken into account. Foreign firms are not more prone to carry out product innovation, except for subsidiaries in clusters.