Innovation and export: evidence from manufacturing SMEs in a developing economy

Abstract

PurposeInnovation allows firms to gain or maintain their competitive advantages in both domestic and international markets. However, the findings on the association between innovation and export vary depending on countries, samples, time, variables and methods used for empirical analysis. The purpose of this study is to examine the influence of different types of innovation on export in small- and medium-sized enterprises (SMEs) in a developing economy in the context of global integration.Design/methodology/approachFor empirical analysis, the authors use a sample of manufacturing SMEs in Vietnam in 2013 and 2015. Because the firms do not engage in innovation at random in the research sample, the authors use propensity score matching to account for self-selection bias. The authors also use different matching estimators to ensure robust results.FindingsInnovation activities are found to be positively associated with the probability of engaging in export activities. The effects are mainly contributed by the adoption of new technology or process.Practical implicationsThis research underscores the importance of public interventions and policies designed to promote innovation and export in the SMEs.Originality/valueTo the best of the authors’ knowledge, this research is one of the early attempts to examine the association between different types of innovation and export in SMEs in a developing economy.