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Oxford Economic Papers Advance Access originally published online on March 28, 2008
Oxford Economic Papers 2009 61(1):74-103; doi:10.1093/oep/gpn011
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© Oxford University Press 2008 All rights reserved

Exporting, R&D, and absorptive capacity in UK establishments

Richard Harris* and Qian Cher Li{dagger}

*University of Glasgow
{dagger}Department of Economics, University of Strathclyde, Sir William Duncan Building, 130 Rottenrow, Glasgow, G4 0GE,UK; e-mail: Cher.Li{at}strath.ac.uk

JEL classifications: L25, O24, O32, R11


  Abstract

This paper models the determinants of exporting (both in terms of export propensity and export intensity), with a particular emphasis on the importance of absorptive capacity and the endogenous link between exporting and undertaking R&D. Based on a merged dataset of the 2001 Community Innovation Survey and the 2000 Annual Respondents Database for the UK, our results suggest that establishment size plays a fundamental role in explaining exporting. Meanwhile, alongside other factors, undertaking R&D activities and having greater absorptive capacity (for scientific knowledge, international co-operation, and organizational structure) significantly reduce entry barriers into export markets, having controlled for self-selectivity into exporting. Nevertheless, conditional on entry into international markets, only greater absorptive capacity (associated with scientific knowledge) seems to further boost export performance in such markets, whereas spending on R&D no longer has an impact on exporting behaviour once we have taken into account its endogenous nature.


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