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Innovation and International Competitiveness of Manufacturing Firms: Evidence from Bulgaria, Czech Republic, Hungary, Poland, and Romania
Abstract
Numerous firm-level studies indicate a positive relationship between innovation and exports, being an important indicator of international competitiveness. The aim of this chapter is to present a cross-country analysis of the relationship between innovation and exports of firms in selected new EU Member States from the CEE region. All types of innovation (i.e. product, process, organizational, and marketing innovation) are analyzed and their relationship with international sales is assessed in this chapter. The analysis is based on Community Innovation Survey (CIS) micro data of 10,903 innovative manufacturing firms from Bulgaria, Czech Republic, Hungary, Poland, and Romania for the 2006 – 2008 period. The logistic regression models are constructed to identify the relationship between each type of innovation and firms' export sales. The reverse causality (i.e. the effect of international sales on firm innovation) is also investigated. The strongest relationship between the introduction of product innovation and export sales on all foreign target markets was revealed for firms in all CEE countries. The influence of other types of innovation on export sales was also proved positive, though weaker, in most of these countries. The influence of international sales on firm's innovation in all surveyed countries was weaker than the impact of innovation on export.
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