Firm exporting and investment in exploratory and exploitative R&D

Abstract

Purpose This study aims to investigate how firms’ internationalization activities through exporting influence their organizational learning. Specifically, this study examines how the level of exporting and geographic market scope impact a firm’s exploratory and exploitative R&D investment differently. Design/methodology/approach Using a sample of 7,055 firms in Spain during the period 2006–2011, the study uses regression analysis (generalized least squares random effects) to test various hypotheses. Findings Although exporting improves organizational learning, learning opportunities vary for different aspects of exporting. Specifically, the level of a firm’s exporting has a significant positive effect on its exploitative R&D investment, whereas geographic market scope of a firm increases its exploratory R&D investment. Practical implications The findings can aid in shaping policies and firms’ decisions pertaining to exporting and exploratory and exploitative R&D investment. As the findings indicate that, the determinants of exploratory and exploitative R&D investment are different, managers and policymakers, who aim at a specific type of R&D investment, should understand which exporting strategy they should pursue. Originality/value Prior research suggests that exporting improves organizational learning. This study extends this knowledge by showing that different aspects of exporting, specifically, the level of exporting and geographic market scope, drive different types of organizational learning.

Concentration of Innovation Investments Along the Business Cycle

“…The contribution of this paper is that this difference in sensitivity to the cycle leads to a concentration of investments during downturns. The empirical analysis also suggests that the results are stronger for smaller firms (up to 50 employees), consistent with the findings in Armand and Mendi (2018) or Cabaleiro-Cerviño and Mendi (2022), but there is no evidence of a differential effect for exporting firms, in contrast with Ke et al (2021).…”

“…Also using the ESEE dataset, Salomon and Jin ( 2008) find learning from exporting to be more intense among firms in industries where the host country is farther away from the technological frontier. Ke et al (2021) consider a differential effect on different components of the innovation mix. They analyze the PITEC dataset for the 2006-2011 period find that a firm's level of exports is positively correlated with exploitative R&D, whereas geographic diversification of exports is associated with increased exploratory R&D. Hence, different components of innovation investments have different determinants.…”

Synergistic effect of R&D and exports on performance in US manufacturing industries: high-tech vs low-tech

“…It has also been argued, at least in the European context, that there is a "virtuous circle:" firms use R&D activity to develop products and take advantage of that innovation to improve their share of the export market. They then find that their successful exporting experience supports further innovation through R&D investment (Guarascio et al, 2016;Ke et al, 2020). Sikharulidze and Kikutadze (2017) also emphasize the significant role that R&D investment plays in developing new products, which, in turn, enhances export performance and competitiveness.…”

Digital platforms and international performance of Italian SMEs: an exploitation-based overview

“…Amongst others, Lisboa et al, (2013) developing the contributions of Danneels (2008) and Vorhies et al (2011) measure exploitation in terms of strengthening contacts in current export markets and improving the understanding of the needs of foreign customers, and they measure exploration in terms of identifying potential customers and assessing the potential of new markets. Tsai and Ren (2019) measure exploration and exploitation with research and development (R&D) capacity and marketing capacity, respectively, whilst Ke et al (2020) measure investments in exploration as investments in basic and applied R&D and those in exploitation as investments in technological R&D.…”