Complementarity of R&D and productivity in SME export behavior

Abstract

This study investigates the link between export behavior, labor productivity and R&D activities in 17,168 small and medium-sized firms (SMEs) in Austria, during the period 1995–2011. The analysis covers six subgroups of SMEs: young, old, micro, born global, manufacturing, and services. Using a two-part model controlling for firm effects, the results show that both the export participation and the export share of SMEs depend significantly and positively on the level of labor productivity (relative to that of large firms in the same industry) and the R&D-sales ratio. Another important finding is that labor productivity strengthens the relationship between R&D activities and exports. Marginal effects show a large degree of heterogeneity in the relationships across the six sub-groups of SMEs. The link between R&D and export behavior, for a given level of labor productivity, is relatively pronounced for manufacturing SMEs, larger and older SMEs, while the other sub-groups are less affected.