The study investigates the impact of business environment on export performance of individual firms in transition economies. For these goals, the study utilizes the firm-level data from the Business Environment and Enterprise Performance Survey (BEEPS V round) across 28 transition economies. Applying the modified CDM model the paper examines the structural link between the business environment reforms, firm R&D, innovation, labor productivity, and export performance. The model was estimated sequentially, step-by-step. The estimates of the structural model, generally, proved our hypothesis about the impact of business environment reforms on the relationships between R&D investments, innovation, labor productivity and export performance. This study also supports the early findings that R&D is an important determinant of innovation, that innovation is a driver of labor productivity and that labor productivity, in turn, substantially increases the probability of firm’s participation at export markets
