Exploring innovation and export interplay in Canadian firms

We propose that there exists a virtuous circular relationship between firm exports and firm innovation whereby they drive and reinforce each other. We analyse two key elements which support this relationship, namely policy initiatives and firm-level strategies for innovation and exports. We use data from Canadian innovation surveys, and the two-stage least squares technique to explore the interplay between innovation and exports. Our results confirm our hypothesis; however, the effect of policies and firm-level strategies are not uniform or predictable across sectors and time.

Automated summary

There is a virtuous circular relationship between firm exports and firm innovation where they drive and reinforce each other. Policy initiatives and firm-level strategies play a supporting role in this relationship, but their effects are not uniform or predictable across different sectors and time periods.