Do R&D Investments Affect Export Performance?

This paper analyses the role of R&D in the export behaviour of Danish firms. Export behaviour is defined as the likelihood of a firm being an exporter. In the theoretical part of the paper it is argued that export and being R&D active are endogenous with respect to each other, and an empirical model is formulated in order to estimate which factors affect the firm's export. It is argued that besides R&D, firm size, wages and a number of other firm-specific factors controlling for risks are highly important for the export performance. In the empirical part of the paper the model is tested on a sample of 3,500 Danish firms. Using a FIML estimation form in order to deal with endogeneity problems between the R&D and export decisions of the firms, the computation clearly verifies the theoretical model put forward. Moreover, R&D is an important factor for being an exporting firm.