Exploring innovation and export interplay in Canadian firms

ABSTRACT

We propose that there exists a virtuous circular relationship between firm exports and firm innovation whereby they drive and reinforce each other. We analyse two key elements which support this relationship, namely policy initiatives and firm-level strategies for innovation and exports. We use data from Canadian innovation surveys, and the two-stage least squares technique to explore the interplay between innovation and exports. Our results confirm our hypothesis; however, the effect of policies and firm-level strategies are not uniform or predictable across sectors and time.

KEYWORDS:

• Innovation
• exports
• policy incentives
• firm strategies

JEL CLASSIFICATION:

• 031
• 038
• 043
• 051

Acknowledgments

This work was supported by The David Sobey Centre for Innovation in Retailing and Services from the Sobey School of Business, the Faculty of Graduate Studies and Research at Saint Mary’s University, and SSHRC Canada Research Chairs. We thank the CDER at Statistics Canada for providing us with access to the SIBS 2009 and 2012, and all the support provided by the CDER team. We also want to thank all our colleagues that have provided comments to earlier versions of this paper. An earlier version of this paper was also presented at the Department of International Business (HEC Montréal) under the Groupe de recherche en affaires internationals (GRAI), and at the Ingenio Seminar at INGENIO, Universidad Politecnica de Valencia. We are very appreciative of the comments and feedback received during these presentation sessions. We are also very appreciative of the comments provided by anonymous reviewers to previous versions of this paper. Finally, it takes a village to write a paper, one of the authors will be forever grateful to the support provided by friends, and extended friends in Ottawa during data analysis of this paper.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by The David Sobey Centre for Innovation in Retailing and Services from the Sobey School of Business, the Faculty of Graduate Studies and Research at Saint Mary’s University, and SSHRC Canada Research Chairs.