Innovation activities and Italian SMEs' exports decisions: a multi-treatment analysis

Abstract: This study aims at estimating the effect of innovation on export growth for a sample of Italian small and medium size manufacturing firms. We define two classes of innovation, namely technological and non-technological. For each class of innovation, we use a propensity score matching strategy to assess if innovating in period t – 1 led to an increase in firms’ probability of seeking for new exporting markets in period t + 1. Moreover, we assess the combined effect of both classes of innovation upon the probability of seeking for new markets. We found that both technological and non-technological innovations increases the probability that a firm will plan to look for new markets abroad, the former type of innovation being, on average, twice as relevant as the latter. Moreover, we found evidence that these are complementary activities, which are more effective on future exports decisions when combined.