Does Firms’ Innovation Promote Export Growth Sustainably?—Evidence from Chinese Manufacturing Firms
Recent theoretical analysis and empirical studies have emphasized that firms’ innovation could significantly improve export growth. However, the positive effect of innovation on exports is likely to change due to unstable domestic offsetting for innovation and increasing worldwide competition for tr...
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doaj-01fb007117cd441ea340d94af7156eb62020-11-25T00:20:18ZengMDPI AGSustainability2071-10502016-11-01811117310.3390/su8111173su8111173Does Firms’ Innovation Promote Export Growth Sustainably?—Evidence from Chinese Manufacturing FirmsLiangfeng Hao0Bin Qiu1Lisette Cervantes2School of Economics and Management, Southeast University, Nanjing 210000, ChinaSchool of Economics and Management, Southeast University, Nanjing 210000, ChinaSchool of Economics and Management, Southeast University, Nanjing 210000, ChinaRecent theoretical analysis and empirical studies have emphasized that firms’ innovation could significantly improve export growth. However, the positive effect of innovation on exports is likely to change due to unstable domestic offsetting for innovation and increasing worldwide competition for trade. This study aims to explore the dynamic link between them. We first develop a theoretical model between innovation and export growth based on the theory of heterogeneity. Export growth is measured through the dimensions of extensive margin and intensive margin so as to better investigate the effect of innovation on export performance. The propositions of mechanism analysis reveal that the effect of innovation on exports is non-linear rather than sustainable. An empirical study is followed to test the propositions by using data from a representative panel of Chinese manufacturing firms. Consistent with the theoretical predictions, the results show an inverted U-shaped relationship between innovation and extensive margin and a U-shaped relationship between innovation and intensive margin. The non-linear relations are verified by a threshold effect test. Further study shows less innovation and more firms on the left side of the relation curves. The distribution suggests irregular innovation ability among the exporters. Moreover, the role of innovation is more important for export growth and the corresponding threshold is higher in terms of high technological sectors. The contribution of this study is to introduce a comprehensive framework to investigate the dynamic effect of innovation on export growth, serving as a modest spur to induce the following studies to explore the sustainability of innovation effect.http://www.mdpi.com/2071-1050/8/11/1173innovationexport growthsustainabilitythreshold effect |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Liangfeng Hao Bin Qiu Lisette Cervantes |
spellingShingle |
Liangfeng Hao Bin Qiu Lisette Cervantes Does Firms’ Innovation Promote Export Growth Sustainably?—Evidence from Chinese Manufacturing Firms Sustainability innovation export growth sustainability threshold effect |
author_facet |
Liangfeng Hao Bin Qiu Lisette Cervantes |
author_sort |
Liangfeng Hao |
title |
Does Firms’ Innovation Promote Export Growth Sustainably?—Evidence from Chinese Manufacturing Firms |
title_short |
Does Firms’ Innovation Promote Export Growth Sustainably?—Evidence from Chinese Manufacturing Firms |
title_full |
Does Firms’ Innovation Promote Export Growth Sustainably?—Evidence from Chinese Manufacturing Firms |
title_fullStr |
Does Firms’ Innovation Promote Export Growth Sustainably?—Evidence from Chinese Manufacturing Firms |
title_full_unstemmed |
Does Firms’ Innovation Promote Export Growth Sustainably?—Evidence from Chinese Manufacturing Firms |
title_sort |
does firms’ innovation promote export growth sustainably?—evidence from chinese manufacturing firms |
publisher |
MDPI AG |
series |
Sustainability |
issn |
2071-1050 |
publishDate |
2016-11-01 |
description |
Recent theoretical analysis and empirical studies have emphasized that firms’ innovation could significantly improve export growth. However, the positive effect of innovation on exports is likely to change due to unstable domestic offsetting for innovation and increasing worldwide competition for trade. This study aims to explore the dynamic link between them. We first develop a theoretical model between innovation and export growth based on the theory of heterogeneity. Export growth is measured through the dimensions of extensive margin and intensive margin so as to better investigate the effect of innovation on export performance. The propositions of mechanism analysis reveal that the effect of innovation on exports is non-linear rather than sustainable. An empirical study is followed to test the propositions by using data from a representative panel of Chinese manufacturing firms. Consistent with the theoretical predictions, the results show an inverted U-shaped relationship between innovation and extensive margin and a U-shaped relationship between innovation and intensive margin. The non-linear relations are verified by a threshold effect test. Further study shows less innovation and more firms on the left side of the relation curves. The distribution suggests irregular innovation ability among the exporters. Moreover, the role of innovation is more important for export growth and the corresponding threshold is higher in terms of high technological sectors. The contribution of this study is to introduce a comprehensive framework to investigate the dynamic effect of innovation on export growth, serving as a modest spur to induce the following studies to explore the sustainability of innovation effect. |
topic |
innovation export growth sustainability threshold effect |
url |
http://www.mdpi.com/2071-1050/8/11/1173 |
work_keys_str_mv |
AT liangfenghao doesfirmsinnovationpromoteexportgrowthsustainablyevidencefromchinesemanufacturingfirms AT binqiu doesfirmsinnovationpromoteexportgrowthsustainablyevidencefromchinesemanufacturingfirms AT lisettecervantes doesfirmsinnovationpromoteexportgrowthsustainablyevidencefromchinesemanufacturingfirms |
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