Effects of innovation strategies on export performance: new empirical evidence from developing market firms

Abstract

Scholars are increasingly emphasizing the importance of investing in a broad innovation strategy when pursuing competitive advantage and growth in foreign markets. However, the majority of existing studies focus mainly on developed economies with high shares of innovative firms. What remains largely underexplored is the heterogeneous impacts of innovation types on SMEs' performances, especially in developing countries. We fill this research gap by using firm-level data from the lower-middle income country of Nigeria. We empirically explore the individual and joint impacts of technological and non-technological innovations on the export performance of SMEs. First, we find that product innovation has a negative impact, whereas process innovation leads to increased export performance. We also find that marketing innovation has a positive effect on export performance. Besides, the joint effects of product, process, and marketing innovations are significant, albeit with heterogeneous impacts on the export performance. Furthermore, we find that the innovation-export performance relationship is influenced by external innovation collaborations. The findings have implications for an efficient design of public policy instruments that aim to promote firm innovation in developing countries.