Journal of International Business Studies

, Volume 42, Issue 3, pp 362–380 | Cite as

Exploring the complementarity between innovation and export for SMEs’ growth

Article
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Abstract

In this paper, we advance and test the idea that innovation and export are complementary strategies for SMEs’ growth. We argue that innovation and export positively reinforce each other in a dynamic virtuous circle, and we identify and describe the process through which this complementarity relationship takes place. Participating in export markets can promote firms’ learning, and thus enhance innovation performance. At the same time, through innovation, firms can enter new geographical markets with novel and better products, therefore making exports more successful, and, by the same token, they can also improve the quality – and consequently increase the sales – of the products sold domestically. We test our theory using an unbalanced panel of Spanish manufacturing firms over the period 1990–1999. We find robust empirical support for our hypothesis: consistent with the presence of complementarity, we show that the positive effect of innovation activity on firms’ growth rate is higher for firms that also engage in exports, and vice versa. Furthermore, we show that, Ceteris paribus, firms’ adoption of one growth strategy (e.g., entering export markets) positively influences the adoption of the other (e.g., innovation).

Keywords

exports innovation/creativity complementarity growth small and medium-sized enterprises (SMEs) R&D 
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Notes

Acknowledgements

We appreciate helpful and constructive comments from the Editor, Myles Shaver, three anonymous reviewers, Bruno Cassiman, Jose Manuel Campa, Gianluca Carnabuci, Guido Corbetta, Marta Maras, Robert Salomon, and Xavier Martin, as well as seminar participants at Carlos III University and CESPRI-Bocconi. We are grateful to the Fundacion Empresa Publica for providing access to these data. The financial support from the Catalan Government Grant No. 2009-SGR919 is gratefully acknowledged.

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Copyright information

© Academy of International Business 2011

Authors and Affiliations

  1. 1.Department of Organization & StrategyCIR and CentER, Tilburg UniversityTilburgthe Netherlands
  2. 2.Bocconi UniversityMilanItaly

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