Export And Firm Innovation

Innovation is the essential source of economic growth and the endogenous force for sustainable development.After decades of booming,China has shifted from a high-speed oriented strategy to a high-quality oriented one.In this critical period of realignment,how Chinese companies improve their independent innovation capabilities has become an important issue.Much of the literature effectively reveal that international trade is an important channel for technology spillovers.Through participating in international markets,firms can absorb technology spillovers from abroad and enhance their independent innovation ability.As the world's largest exporter,whether China can increase its innovation ability by participating in the export market is worth exploring.Researches come to consensus that export has direct and indirect effects on firm innovation,but these two effects are separately explored in most studies.This paper attempts to use a unified empirical framework to examine both effects simultaneously,and creatively consider the interaction between enterprises.More specifically,based on the empirical framework proposed by Hudgens and Halloran(2008),the paper divides the enterprises into different clusters according to the industry and region,and use the micro-enterprise data of China to study the various effects of export on firm innovation.The empirical results show that the effects of exporting on firm innovation will vary with the agglomeration degree of exporters in the cluster.Specifically,the direct effect of exports on innovation will be weakened,with the increase in the proportion of exporting enterprises within the cluster.However,there is an inverted "U" relationship between the spillover effect of exports on business innovation and the proportion of export enterprises within the cluster.And the same story occurs between the total effect of exports on business innovation and the share of export enterprises within the cluster.Empirical results show that exporting is conducive to the improvement of firms' innovation ability.Therefore,government should encourage enterprises to obtain advanced technologies from developed countries by entering the export market.At the same time,the total effect of exports on enterprise innovation and the proportion of exporting firms in the cluster are inverted “U” shaped,which indicates that there is optimal export density.Market regulators should formulate corresponding policies to keep the exporter density within an appropriate range in specific regions and industries,create a good competitive environment,and avoid excessive agglomeration of export enterprises.In such case,enterprises would have strong incentives to improve their innovation capabilities and can better promote the high-quality development of China's economy.