Innovative capacity and export perfor mance: Exploring heterogeneity along the export intensity distribution

This paper sheds additional light on the relationship between firm level innovative capacity and export intensity. By drawing from the recent literature on exporters' heterogeneity, we apply quantile regression techniques to a sample of Italian firms in order to verify whether the effect of innovative capacity – measured by R&D expenditures – varies along the conditional distribution of the export intensity, after controlling for censoring and potential endogeneity of the innovation variable. We confirm that R&D expenditures positively affect export intensity and we find that such effect has a bell shaped pattern along its conditional distribution: firms characterized by export intensity of about 60% can take highest advantage from investing in R&D activity. Overall results prove to be robust to several specification checks and suggest not only that firms innovative capacity helps to explain heterogeneity in export intensity performance, but also that its positive effect differs across the export to sales ratio distribution.