Linkages between R&D, innovation, investment and export performance: evidence from European manufacturing firms

ABSTRACT

This work explores the interrelations between a firm’s export performance and innovation and tangible investments. We lay emphasis on the role played by R&D in stimulating both innovation and the accumulation of physical assets. Our study is novel in proposing an integrated model with investment, innovation and R&D, in a framework of simultaneous equations which take into account their mutual correlations. Econometric results suggest that both product innovation and tangible investments are significantly and jointly linked to the export intensity of European manufacturing firms. This has significant implications from the managerial perspective. Managers are asked to capitalise on R&D and, while trying to improve their export performance, they should focus on tangible investments and innovative activities which are strictly linked to research activity.

KEYWORDS:

• R&D
• innovation
• tangible investment
• export
• simultaneous equations

JEL CLASSIFICATION:

• F14
• O32
• C31
• D22

Disclosure statement

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

Notes on contributors

Oliviero A. Carboni has particular research interest in the quantitative econometric modelling of firms choices including behavioural, geographical and microeconomic aspects into this modelling. He also has published in several journals including Information Economics and Policy, Journal of Mathematical Economics, Economics of Innovation and New Technology, Journal of Policy Modeling, Journal of Technology Transfer, Structural Change and Economic Dynamics, The Review of Regional Studies, Metroeconomica, International Review of Applied Economics, Mathematics and Financial Economics, International Journal of Economics and Financial Issues, Social Indicators Research, The Journal of Economic Studies, Applied Economics, R&D Management, Technological Forecasting & Social Change.

Giuseppe Medda’s research interests cover a number of areas in applied microeconomics: R&D and innovation, with a particular focus on the link with productivity and exporting behaviour; university technology transfer; inter-firms collaborations. He also studies macroeconomic growth models with a particular focus on the role played by fiscal policy and technological change. He has published in several journals including Economics of Innovation and New Technology, Journal of Technology Transfer, Metroeconomica, Journal of Productivity Analysis, Mathematics and Financial Economics, Applied Economics.

Data availability statement

The data that support the findings of this study are openly available in Bruegel – The Brussels-based economic think tank – website at: https://bruegel.org/wp-content/uploads/2015/06/EFIGE_Truncated_1_updated.xlsx