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Assessing the effect of domestic Domestic vs

foreign R&D
and foreign R&D on export: and export

empirical evidence from China

Abdul Rauf
Department of Government and Public Policy, National Defence University,
Islamabad, Pakistan, and Received 17 February 2022
Revised 22 August 2022
Yongwen Bao 24 November 2022
Accepted 7 January 2023
School of Economics, Wuhan Textile University, Wuhan, China

Abstract
Purpose – Although the theoretical arguments provide several channels through which innovation affects
export, empirical validation of this relationship is scarce. Further, the impact of the diverse channels of
domestic and foreign research and development (R&D) on export is assessed in isolation by previous studies.
This paper empirically investigates the impact of technological innovation on export capacity and intensity of
industrial enterprises in emerging countries by considering three channels of domestic innovation and foreign
R&D spillovers, namely internal R&D, embodied knowledge and disembodied knowledge in a unified
framework.
Design/methodology/approach – Data on China’s industrial enterprises in the manufacturing sector
are extracted from the China National Bureau of Statistics (NBSC), the Ministry of Science and
Technology of China (MST) and the UN Comtrade database for the period from 1998 to 2020. The
instrumental variables two-stage least squares (IV-2SLS) and three-stage least squares (IV-3SLS)
methods are used to control for the possible endogeneity bias and the problem of cross-equation
correlation between residuals.
Findings – The results show that internal R&D is a critical factor to enhance the export performance of
enterprises in emerging countries, while the effect of embodied spillovers and public–private collaboration on
export capacity and intensity of industrial enterprises is substantial. Further, disembodied knowledge that is
acquired through licensing of technology from advanced countries does not directly contribute to the export
performance of enterprises but requires a threshold level of internal R&D capability. This study’s results also
report a greater effect of embodied knowledge spillovers on export capacity and export intensity than internal
R&D in emerging countries. The results are consistent to changes in the sample period and the estimation
methods. The findings of the paper suggest that developing countries can speed up the process of export
upgrading by relying on both domestic and foreign R&D efforts.
Practical implications – The findings would help policymakers to keep in mind the relative importance of
internal R&D and embodied and disembodied knowledge spillovers for export performance before formulating
a catch-up strategy and the outcome would encourage them to consider prior related knowledge in terms of
internal R&D capability while acquiring external technology.
Originality/value – This study fills the gap in the existing literature by providing empirical validation of the
innovation–export interplay and simultaneously assessing the effect of three diverse channels of technological
innovation on the export performance of industrial enterprises. This paper enunciates important policy lessons
for emerging countries’ smooth transition to a knowledge-based economy.
Keywords Export, Internal R&D, Embodied knowledge, Disembodied knowledge, Manufacturing industries
Paper type Research paper

JEL Classification — F14, F23, O14, O32, O33

Funding: The work receives no funding
Data statement: Data that support the findings of this study can be accessed from the National
Bureau of Statistics of China (http://www.stats.gov.cn/english/Statisticaldata/AnnualData/), Ministry of
International Journal of Emerging
Science and Technology of China (https://oversea.cnki.net/KNavi/YearbookDetail? Markets
pcode5CYFD&pykm5YBVCX&bh5) and UN Comtrade database (https://comtrade.un.org/). © Emerald Publishing Limited
1746-8809
Conflicts of interest: The authors declare no conflict of interest. DOI 10.1108/IJOEM-02-2022-0282
IJOEM 1. Introduction
Technological innovation determines the efficiency of a country’s outward pattern which is
regarded as a key element of industrialisation (Aw et al., 2008; Greenhalgh, 1990). The extant
literature postulates that the role of innovation in the creation of a robust export system is
associated with diverse channels of indigenous innovation and international technology
spillovers (Yu et al., 2022; Wang et al., 2020; Anwar and Sun, 2018; Rodil et al., 2015; Harris and
Li, 2009; Verspagen and Wakelin, 1997). Although the theoretical arguments provide several
channels through which innovation affects export, empirical validation of this relationship is
scarce. Further, the impact of the diverse channels of domestic and foreign research and
development (R&D) on export is assessed in isolation by previous studies. This paper intends
to utilise a unified empirical framework to assess the relative importance of three diverse
channels of domestic innovation and foreign R&D spillovers, including internal R&D,
embodied knowledge and disembodied knowledge, for the export capacity and intensity of
industrial enterprises in emerging countries.
The effect of innovation on export can be associated with domestic R&D efforts and
technological spillovers of foreign R&D (Wang et al., 2020; Cassiman and Veugelers, 2006).
On one hand, internal R&D activities may lead to lowering average costs in existing
production processes (Kale and Rath, 2018; Los and Verspagen, 2007) and improving the
quality of products (Zhu and Fu, 2013). Further, internal R&D activities provide a firm with
the basic skills and expertise for enhancing productivity and moving to new product
development (Baumann and Kritikos, 2016; Aw et al., 2008; Romer, 1990). On the other hand,
R&D activities facilitate the absorptive capacity of enterprises (Cohen and Levinthal, 1989)
and improve technical skills to internalise and adopt advanced technologies (Eaton and
Kortum, 1996; Grossman and Helprnan, 1994). Besides, learning from external sources of
R&D is critical for efficient production and exporting especially in emerging countries (Rauf
et al., 2021; Li, 2011; Zhang and Song, 2001). The literature distinguishes R&D externalities
into embodied and disembodied spillovers. The embodied knowledge, which embodies the
imported intermediate products, accelerates learning and export competitiveness in
developing countries (Liu and Buck, 2007). Further, disembodied knowledge is acquired
through licensing, R&D contracting and outsourcing of technological spillovers (Cassiman
and Veugelers, 2006). Li (2011) argues that the purchase of foreign technology improves the
innovation capability of the firms having internal R&D facilities. The significance of the
diverse sources of technology for trade and growth has recently received enormous attention.
However, there is a lack of systematic empirical research on the impact of different knowledge
resources on the export performance of enterprises.
This paper investigates the relative importance of different channels for domestic and
foreign R&D namely internal R&D, embodied knowledge and disembodied knowledge
spillovers on export capacity and intensity of emerging market enterprises during the period
from 1998 to 2020. Exploring the innovation-export interplay is particularly important in
China seeking to expedite the catching-up process. During the last three decades, the export
structure of the manufacturing sector in China has undergone disruptive changes. For
example, data from the National Bureau of Statistics of China (NBSC) show that the share of
the output and export of new products in total sales revenue has increased from 11.4% and
2.8% in 2008 to 21.9% and 4.05% in 2020, respectively (NBSC, 2008–2020). Thus,
investigating the relative importance of multiple channels of technology is critical at this
stage for the rapid transition to an industrialised country. The results based on the
instrumental variables (IV) method show that internal R&D efforts and foreign knowledge
spillovers contribute to the export capacity and export intensity of industrial enterprises for
the considered period. Particularly, we find that embodied knowledge spillovers have a
relatively stronger impact on export than internal R&D efforts, while disembodied
knowledge does not directly contribute to exporting and requires a threshold level of
internal R&D capability. Further, public–private collaboration positively affects the export Domestic vs
performance of enterprises. These results are robust to several tests and sensitivity checks. foreign R&D
This paper contributes to the existing literature on innovation and trade in numerous
ways. First, while theoretical arguments provide several channels through which innovation
and export
affects export, empirical authentication of this association is scarce. This study attempts to
empirically assess the relative importance of domestic and foreign R&D efforts for export.
We argue that the distinction between internal R&D, embodied knowledge and disembodied
knowledge spillovers and their impact on export is critical. Further, the effect of multiple
channels of innovation on export is assessed in isolation in previous studies, undermining
their relative importance in innovation-export interplay. This study offers a unified
framework to study the relative importance of different channels of innovation for the export
performance of industrial enterprises. Second, the innovation-export nexus is broadly
assessed in developed countries and developing countries have received much less attention
in this regard. Our study fills this gap by examining that innovation is critical for the
competitiveness of emerging countries in the catching-up process.
The remainder of this paper is organised as follows. The next section presents literature
review and hypotheses development. Section 3 specifies the model, methodology and data.
Section 4 provides empirical results and discussions. In the last, section 5 concludes the
analysis and discusses policy implications.

2. Literature review and hypotheses

Standard classical and neoclassical theories of international trade undermine the role of
innovation assuming technology to be a universal phenomenon that is freely available to all.
An early viewpoint confirming the importance of innovation and learning in trade is linked to
neo-technology models (Grossman and Helpman, 1991; Krugman, 1979; Vernon, 1966; Posner,
1961). These models explain the potential role of product and process innovation in driving
the production structure of an economy. A benchmark model is “Vernon’s product cycle
theory” which allocates life cycles to the manufacturing process of a product. The theory
postulate that new products are created and developed in advanced countries which possess
a strong innovative capability and then, in the later stages, the products are migrated to
developing countries. The remarkable success of Asian Newly Industrialised Economies
(NIEs) provides relevant evidence. Another viewpoint is presented by technology-gap
theories which assume that the technology gap between countries determines their respective
trade pattern (Posner, 1961). This gap is reduced or expanded by such technology upgrading
efforts as promoting indigenous innovation activities and enhancing the rate of foreign
technology transfer among countries (Greenhalgh, 1990). Moreover, recent developments in
trade theories and models associated with endogenous growth provide some standard
framework that allows technology, knowledge creation and learning to be a critical part of
production processes (Grossman and Helpman, 1991; Young, 1991; Romer, 1990).

2.1 Domestic R&D and export

A substantial body of empirical literature on the innovation-trade relationship suggests that
export performance is positively associated with the different dimensions of technological
innovation. A growing number of studies validate these results at industry, sector and national
level (Dong et al., 2022; Bıçakcıo

glu-Peynirci et al., 2019; Rodil et al., 2015; Cassiman et al., 2010;
Lachenmaier and W€oßmann, 2006; Roper and Love, 2002; Wakelin, 1998; Kumar and
Siddharthan, 1994; Greenhalgh, 1990; Fagerberg, 1988). Further, numerous studies find a
significant positive relationship between innovation and export in the case of China (Rauf et al.,
2021; Wang et al., 2020; Anwar and Sun, 2018; Tang and Zhang, 2016; Wang et al., 2013;
IJOEM Guan and Ma, 2003; Zhang and Song, 2001). However, most of the previous studies neglect to
empirically assess the relative importance of internal R&D and external sources of technological
spillovers in the export performance of industrial enterprises in emerging countries.
Internal R&D efforts are primary sources of effective innovation capability (Rauf et al.,
2021; Romer, 1990). Studies show that internal R&D activities contribute to product
diversification, improve the quality of existing product and leads to new product
development (Baumann and Kritikos, 2016; Los and Verspagen, 2007). Internal R&D
activities also influence learning and knowledge creation in developing countries which in
turn enhance their absorptive capacity (Zhu and Fu, 2013; Cohen and Levinthal, 1989).
Further, R&D activities are significant to the extent that they contribute to sustained export
competitiveness. For example, Aw et al. (2008) argue that R&D investment accelerates export
performance through its effect on long-term productivity. Schott (2008) and Baumann and
Kritikos (2016) examine that one way for developing countries to close the gap with
developed countries is to expand indigenous innovation capacity. In a recent study, Wang
et al. (2020) find that R&D intensity enhances productivity which in turn facilitates export of
the sophisticated products. Moreover, several studies argue that domestic innovation is
critical to internalise, absorb and assimilate advanced technologies (Eaton and Kortum, 1996;
Grossman and Helprnan, 1994).
The existing literature recognises various channels through which R&D efforts influence
export performance. First, R&D activities influence the development of new products and
improve the productivity of existing production processes which contribute to a firm’s
sustained market position (Wang et al., 2020; DiPietro and Anoruo, 2006). Further, innovation
improves a country’s rank in the global value chain and enhances the capability of producing
complex products which accelerates export performance (Rogers, 2004). Second, the positive
spillovers of R&D on labour productivity facilitate total factor productivity (TFP) and reduce
the average cost of production, allowing a competitive advantage for the product in the world
market (Bernard et al., 2007; Wakelin, 1998). Third, R&D causes the export structure to
transform into more technical products which provide monopoly rent to the incumbent until
the competitor gains the ability to imitate the technology (Rodil et al., 2015; Verspagen and
Wakelin, 1997). Finally, innovation influences product quality, design, variety, reliability, and
delivery and improves other technical services related to the product (Harris and Li, 2009;
Montobbio and Rampa, 2005). Thus, we hypothesise that:
H1. Internal R&D has a positive effect on export capacity and export intensity of
industrial enterprises.

2.2 Foreign R&D spillovers and export

Extant literature confirms that innovation in latecomers is associated with the imitation,
assimilation and learning from external knowledge resources including embodied and
disembodied knowledge (Yu et al., 2022; Cassiman and Veugelers, 2006; Amsden, 1989).
Knowledge spillovers from FDI, firms’ exposure to the international market and acquisition
of technology from advanced countries through licensing and outsourcing is critical in this
regard (Anwar and Sun, 2018; Krammer, 2014; Lall, 2003). FDI significantly influences the
association between technological innovation and exports through promoting R&D-related
activities of MNEs, sharing of managerial skills, movement of trained labour, demonstration
effect, etc. (Narula and Driffield, 2012; Zhang and Song, 2001; Griliches, 1991). FDI also
influence export activity by expanding export volumes, diversifying and increasing the
frontier of exported products, improving the quality of exports, increasing competition in the
domestic market and enhancing the technical capacity of domestic enterprises (Villar et al.,
2020; Amighini and Sanfilippo, 2014). MNEs often engage in the trade of new and technology-
intensive products that would not be otherwise available in the export basket of that country
(Rauf et al., 2021). Further, the re-export of these products provides positive spillovers to local Domestic vs
enterprises for entering the foreign market at a low entry cost (Harding and Javorcik, 2012; foreign R&D
Crespo and Fontoura, 2007).
Besides, enterprises can obtain useful technology through import and licensing from
and export
foreign technological markets which may lead to product and process innovation in
developing countries (Abubakar et al., 2019; Kasahara and Lapham, 2013). The acquisition of
technology leads to faster accumulation of knowledge and higher TFP, due to resource
allocation to higher productive activities (Wang et al., 2013; Grossman and Helpman, 1991).
The import of advanced technology enhances the learning process in domestic firms such as
through reverse engineering which may lead to export competitiveness (Vogel and Wagner,
2010). The acquisition of foreign technology not only accelerates the development of new
products in enterprises (Liu and Buck, 2007) but also the use of a variety of intermediate
goods improves diversification and quality of export (Pierola et al., 2018). The technological
spillovers from external technology facilitate cost reduction and competitive advantage
(Ma and Rauf, 2020; Lileeva and Trefler, 2010). Further, Leone and Reichstein (2012) examine
that knowledge acquired from external sources facilitates the invention process in a firm and
improves the licensee’s competitive advantage in domestic and foreign markets.
Nonetheless, the potential benefit of foreign R&D efforts to export performance of enterprises
cannot accrue until the host country has maintained a specific level of domestic R&D capability,
education, human capital, infrastructure and others (Yu et al., 2022; Girma, 2005). This
phenomenon has highlighted the importance of the complementarity of domestic and foreign
R&D efforts for innovation and export. For example, Hu et al. (2005) and Hou and Mohnen (2013)
find that internal R&D complements foreign technology to accelerate productivity in industrial
enterprises. Li (2011) argue that the acquisition of foreign technology may not facilitate
innovation if firms neglect to conduct internal R&D. Wang and Li-Ying (2014) investigate that
licensing of technology from the international market has a positive effect on new product
development which is contingent upon absorptive capacity and knowledge endowment. In a
recent study, Yu et al. (2022) find that R&D capacity provides a conducive environment to absorb
external technology in emerging countries. The hypothesis states that:
H2. Foreign R&D spillovers have a positive effect on export capacity and export
intensity of industrial enterprises.
H2a. Embodied knowledge has a positive effect on export capacity and export intensity
of industrial enterprises.
H2b. Disembodied knowledge has a positive effect on export capacity and export
intensity of industrial enterprises.

2.3 Public–private collaboration and export

The public–private collaboration is critical, especially in emerging countries where the state
has a significant role through substantial ownership of enterprises (Yi et al., 2013) and the
contribution of privatisation or the development of the private sector in production efficiency
and profitability is extensively advocated (Estrin et al., 2009). The ownership structure of
firms is a crucial determinant of export performance. On the one hand, state ownership plays
a significant role in providing motivation and incentives for exporting through public policy
(Yi et al., 2013). It may also restrict export in the case of excessive control on assets and
non-economic targets. On the other hand, private ownership significantly influences exports
through its effect on labour productivity and efficient management of scarce resources (Chen
et al., 2021; Estrin et al., 2009). The interaction between public and private ownership allows
market forces and government to play their designated roles for a competitive outward
pattern of an economy (Kohli, 2004). Japan and South Korea’s evidence provide a substantial
IJOEM example whereby, to formulate a robust development strategy, the state interacted with the
private sector by protecting large business groups and providing preferential access to
capital (Amsden and Chu, 2003; Johnson, 1982). Also, state intervention in these countries
helped acquire foreign technology through licensing agreements and technical cooperation
agreements so that it can be leveraged in the domestic market for building industrial
capability, enhancing TFP and stimulating international competitiveness (Kohli, 2004; Pack
and Westphal, 1986).
In transition countries like China, state ownership is assessed by profitability,
maintaining the level of employment and having control of strategic assets. Thus, state-
owned enterprises (SOEs) may face some commercial inefficiencies (Dong et al., 2022).
Reforms of SOEs entail a shift from state to private ownership in which government
selectively privatise the non-performing SOEs, increasing the interaction and efficiency of
public–private ownership (Chen et al., 2021). The status of the private sector in China
identifies a system of separate ownership working in tandem with the public sector. In this
regard, the ongoing market-oriented reforms explain the interaction between public and
private ownership for a competitive market, whereby performing SOEs have a respected
place (Hong, 2016). Thus, the hypothesis describes that:
H3. The interaction between public–private ownership in an industry positively affects
export capacity and export intensity of industrial enterprises [1].

3. Methodology, data and variables

The preceding discussion suggests that internal R&D efforts, foreign technological spillovers
from embodied knowledge and disembodied knowledge are significant determinants of the
export performance of enterprises.
Thus, the export capacity and intensity of enterprises in an industry i at time t is
expressed as
EXPCit ¼ f ðR&Dit ; EMB Knowledgeit ; DIS Knowledgeit ; OtherÞ (1)
EXPIit ¼ f ðR&Dit ; EMB Knowledgeit ; DIS Knowledgeit ; OtherÞ (2)

where EXPC and EXPI are the dependent variables of export capacity and intensity of
enterprises respectively, R&D represents a vector of variables on internal R&D efforts,
including R&D and Patent. The EMB_Knowledge shows a vector of two variables on sources
of embodied knowledge spillovers including FDI and Trade. DIS_Knowledge denotes
disembodied knowledge spillovers from licensing of advanced technology. Other includes an
interaction variable on public and private ownership (State*Private) and two control
variables including the size of an industry (Size) and human capital (HC).
A log-linear functional form may reduce the possibility of heteroscedasticity and provide
direct elasticities of export performance concerning explanatory variables. The empirical
model takes the following form:
lnEXPCit ¼ a1 þ a2 lnR&Dit þ a3 lnPatentit þ a4 lnFDIit þ a5 lnTradeit
þ a6 lnDIS Knowledgeit þ a7 lnR&Dit 3 lnDIS Knowledgeit (3)
þ a8 lnStateit 3 lnPrivateit þ a9 lnSizeit þ a10 lnHC þ νt þ εit
lnEXPIit ¼ a1 þ a2 lnR&Dit þ a3 lnPatentit þ a4 lnFDIit þ a5 lnTradeit
þ a6 lnDIS Knowledgeit þ a7 lnR&Dit 3 lnDIS Knowledgeit (4)
þ a8 lnStateit 3 lnPrivateit þ a9 lnSizeit þ a10 lnHC þ νt þ εit
where νt denotes time-specific effect, and εit is a random error term which is uncorrelated with Domestic vs
any of the industry-specific or time-specific effects and the independent variables. foreign R&D
The paper mainly uses enterprise-level data which is classified into 27 two-digit
manufacturing industries according to the Industrial Classification of the National Economy
and export
(ICNE) for the period from 1998 to 2020. Data is mainly collected from the Ministry of Science
and Technology (MST) of China (MST, 1998–2020), China Statistical Yearbook issued by
NBSC (NBSC, 1998–2020) and the United Nations COMTRADE database (United Nations,
1998–2020). The reported data were presented in nominal RMBs which were converted to real
2005 values using PPI as reported by NBSC. We also use a second panel which covers a
shorter period from 2000 to 2010. The objective is to analyse results from different periods
amid rapid structural transformation in China.

3.1 Dependent variables

The dependent variables of export capacity (EXPC) and export intensity (EXPI) are measured
by the average value of manufactured exports to total enterprises in an industry and an
industry’s share in total manufactured export respectively. While the former controls for the
average differences at the enterprise level in total export, the latter incorporates the
contribution of the industry-level share of the manufacturing sector. We follow Sheng (2002)
to convert SITC three-digit commodity level data into the manufacturing sector’s two-digit
industries. Further, the export data was originally reported in US dollars which were
converted to Chinese RMBs using the nominal exchange rate from World Development
Indicators (WDI) and then converted to 2005 real values using PPI from NBSC.

3.2 Independent and control variables

3.2.1 Internal R&D. We proxy internal R&D activities by domestic spending on R&D in an
industry (R&D) which is an extensively used proxy of R&D activities. However, the literature
postulates that, in many cases, R&D expenditure alone may not efficiently interpret
innovation because (a) Firms’ R&D activities often produce delayed effects (Mairesse and
Mohnen, 2002); (b) innovation may emerge from the external innovative environment rather
than firms’ efforts (Harris and Moffat, 2011); (c) R&D may lead to size bias in some industries,
including engineering and instrumentation, where the production process is utilised to
produce innovation rather than R&D (Wakelin, 1998). Further, Liu and Qiu (2016), among
others, argue that patents are a more effective proxy for innovation efforts in China than R&D
expenditures. Thus, we also include the number of patent applications accepted per employee
(Patent) in the empirical model. Introducing both the input and output of innovation in
the regression equations (3) and (4) helps avoid the possible shortcomings in the use of a
single variable.
3.2.2 Embodied knowledge. Two variables, FDI and Trade, measure technological
spillovers from embodied knowledge. Domestic enterprises receive technological spillovers
from different activities of multinational enterprises (Villar et al., 2020; Narula and Driffield,
2012; Griliches, 1991). The FDI variable is proxied by the fixed assets share of foreign
enterprises in total industry assets. Further, trade openness is critical for external knowledge
spillovers because advanced technologies are embodied in imported new equipment (Vogel
and Wagner, 2010). Also, firms receive productivity gains and overall competitiveness from
trade (Kasahara and Lapham, 2013). The Trade variable is proxied by the sum of export and
import to the gross output of an industry.
3.2.3 Disembodied knowledge. Disembodied knowledge is a significant source of external
technology spillovers and it is mainly acquired through licensing. The study measures the
variable on disembodied knowledge by expenditures on the licensing of new technologies
from advanced countries (DIS_Knowledge). Existing literature argues that the licensing of
IJOEM advanced technology facilitates new product development and accelerates competitive
advantage (Wang and Li-Ying, 2014). However, technological knowledge is tacit and
path-dependent, while the absorption of external technology requires internal R&D
capability (Hou and Mohnen, 2013). Thus, capturing the effect of the interaction between
internal R&D and licensing of external technology on export performance is critical. In this
regard, we introduce an interaction variable between the import of disembodied knowledge
and domestic R&D activities (R&D 3 DIS_Knowledge).
Economic reforms regarding public–private collaboration in the economy have played a
critical role in China’s astounding economic growth. We also measure the direct effect of the
interaction between public and private ownership on export by introducing an interaction
variable between state and private ownership (State 3 Private). State ownership is measured
by the share of state-owned assets in total industry assets (State) and private ownership is
measured by the share of private assets in total industry assets (Private). Moreover, human
capital and the size of the industry are also included as control variables. The human capital
variable is proxied by the number of scientific and technological (S&T) development
personnel in an industry (Human Capital) and the size of an industry is measured by the share
of enterprises in total sales (Size). Description and summary statistics of all the variables are
provided in Table 1.
A substantial body of literature predicts that there may exist reverse causality in the
relationship between FDI and export (Harding and Javorcik, 2012; Zhu and Fu, 2013) which
may lead to potential endogeneity bias. It renders commonly used fixed effect and random
effect (RE) methods inconsistent. Further, our estimation of Durbin–Wu–Hausman test
statistics (Wooldridge, 2010) cannot accept the null hypothesis of FDI to be the exogenous
variable. Thus, we estimate equations (3) and (4) using the instrumental variables two-stage
least squares (IV-2SLS) method. Two-year lagged values of the FDI variable are used as
instruments because of their appropriateness and high correlation with the endogenous

St.
Variables Measurements Obs. Mean Dev

Dependent var.
Export capacity The value of manufactured exports divided by total firms in 621 7.561 1.137
an industry
Export intensity The share of an industry in total manufactured export 621 3.878 1.206
Independent Var.
PATENT Number of domestic patent applications per employee 621 6.242 1.461
R&D The total value of the domestic spending on R&D in an 621 12.976 1.903
industry
FDI Fixed assets share of foreign-owned enterprise in total 621 2.091 0.524
industry assets
Trade The ratio of the sum of exports and imports to the gross 621 1.283 1.059
output value of an industry
Disembodied Expenditures on the licensing of advanced technologies 621 2.646 2.268
Knowledge from foreign markets divided by the total number of firms in
an industry
State Ownership Share of state-owned enterprises in total industry assets 621 1.681 1.047
Private Ownership Share of private-owned enterprises in total industry assets 621 1.716 0.837
Table 1. Size Ratio of sales revenue to total enterprises in an industry 621 10.195 0.858
Definitions and Human Capital Number of S&T personnel in an industry 621 10.657 1.357
summary statistics Note(s): All variables are in natural log form. Values are based on two-digit level industries
of variables Source(s): Authors’ own calculations
variable (Rauf et al., 2021; Tang and Zhang, 2016; Lileeva and Trefler, 2010). In addition, it Domestic vs
may be unrealistic to expect that the cross-equation residuals are uncorrelated in a system foreign R&D
of equations. In this regard, we utilise three-stage least squares (IV-3SLS) method to check
the robustness of our estimates. Moreover, studies in existing literature examine that
and export
occurrence of heteroskedasticity in idiosyncratic error terms is a natural phenomenon,
especially in a panel with relatively more cross sections than time (Wooldridge, 2010). The
bias can be eliminated by calculating robust standard errors. We also compute robust
standard errors to obtain heteroskedasticity-controlled results. Further, as R&D and Patent
denote input and output of the innovation process, respectively, these variables appear
separately in the estimation equation, and we run regressions by including and excluding
these variables.

4. Results and discussions

Equations (3) and (4) test the effect of our three channels of domestic and foreign R&D efforts
namely internal R&D, embodied knowledge and disembodied knowledge on export capacity
and export intensity of industrial enterprises in emerging countries. Tables 2 and 3 present
the results of IV-2SLS estimation within which the alternative approaches to robust estimates
are adopted and presented in models 1–5. Further, year dummies are included in all
estimations to control for period-effect as well as the contemporaneous correlation among
individual units. In general, empirical results are plausible and R-Squared is fairly high in all
the regression models (i.e. between 0.479 and 0.848).

Main 2000–2010
(1) (2) (3) (4) (5)

Constant 3.562*** 4.357*** 3.743*** 5.151*** 5.713***

(0.734) (0.718) (0.778) (1.016) (0.972)
R&D 0.092* 0.155*** 0.138***
(0.053) (0.058) (0.049)
Patent 0.125*** 0.127*** 0.107***
(0.031) (0.032) (0.032)
FDI 0.452*** 0.505*** 0.497*** 0.701*** 0.735***
(0.092) (0.084) (0.092) (0.158) (0.144)
Trade 0.578*** 0.562*** 0.579*** 0.490*** 0.534***
(0.036) (0.036) (0.035) (0.070) (0.070)
DIS_Knowledge 0.005 0.020 0.027 0.001 0.039*
(0.016) (0.017) (0.017) (0.017) (0.020)
State 3 Private 0.050* 0.017 0.041
(0.030) (0.031) (0.039)
R&D 3 DIS_Knowledge 0.021** 0.031*** 0.027***
(0.009) (0.010) (0.009)
Size 0.484*** 0.537*** 0.506*** 0.400*** 0.401***
(0.068) (0.065) (0.066) (0.090) (0.084)
Human Capital 0.102** 0.032 0.122** 0.066
(0.052) (0.038) (0.052) (0.082)
Period effect Yes Yes Yes Yes Yes
No. of Obs. 567 567 567 243 243
Overall R-Squared 0.766 0.789 0.783 0.632 0.664 Table 2.
Note(s): Standard errors are in parenthesis Panel IV-2SLS
* Significance level of 10% estimates (dependent
** Significance level of 5% variable: export
*** Significance level of 1% capacity)
IJOEM Main 2000–2010
(1) (2) (3) (4) (5)

Constant 6.505*** 4.501*** 6.865*** 4.735*** 3.851***

(0.832) (0.829) (0.863) (1.204) (1.173)
R&D 0.255*** 0.376*** 0.156***
(0.057) (0.061) (0.056)
Patent 0.138*** 0.128*** 0.127***
(0.034) (0.034) (0.037)
FDI 0.396*** 0.508*** 0.461*** 0.590*** 0.696***
(0.098) (0.094) (0.098) (0.185) (0.173)
Trade 0.240*** 0.191*** 0.250*** 0.321*** 0.371***
(0.039) (0.040) (0.039) (0.084) (0.085)
DIS_Knowledge 0.046*** 0.069*** 0.079*** 0.002 0.033
(0.017) (0.018) (0.018) (0.020) (0.023)
State 3 Private 0.157*** 0.125*** 0.071
(0.032) (0.033) (0.045)
R&D 3 DIS_Knowledge 0.021** 0.031*** 0.021**
(0.009) (0.010) (0.010)
Size 0.039 0.048 0.031 0.238** 0.244**
(0.075) (0.075) (0.073) (0.105) (0.101)
Human Capital 0.064 0.199*** 0.038 0.044
(0.055) (0.044) (0.055) (0.096)
Period effect Yes Yes Yes Yes Yes
No. of Obs. 567 567 567 243 243
Overall R-Squared 0.588 0.583 0.650 0.479 0.536
Table 3.
Panel IV-2SLS Note(s): Standard errors are in parenthesis
estimates (dependent * Significance level of 10%
variable: export ** Significance level of 5%
intensity) *** Significance level of 1%

The coefficients of R&D and Patent variables are positive and statistically significant in all
models provided in Tables 2 and 3. It suggests that internal R&D efforts positively affect
export capacity and export intensity of enterprises in the sample periods 1998–2020 and
2000–2010, supporting H1. The result is in line with the economic theory which postulates
that innovation activities affect the development of new products and enhance the
productivity of existing production processes which contribute to remarkable export
performance (Rodil et al., 2015; Aw et al., 2008). In terms of magnitude, model 1 shows that a
one percent increase in R&D spending causes export capacity and export intensity to
increase by 0.09% and 0.25% respectively (see Tables 2 and 3). Similarly, a one percent
increase in patent counts leads to a 0.12% and 0.14% increase in export capacity and export
intensity respectively (see Tables 2 and 3). Our findings substantiate the role of national
scientific and technological development efforts including the Chinese government’s
endeavour to substantially increase industry-level R&D spending in the manufacturing
sector. Our findings are also in line with the results of recent studies (Rauf et al., 2021; Rodil
et al., 2015; Zhu and Fu, 2013). Further, the greater coefficient values of R&D and Patent for
EXPI suggest a stronger impact of domestic R&D on the export intensity of enterprises.
We find support for H2a because the coefficients on FDI and Trade are positive and
significant in models 1–5, suggesting that embodied knowledge spillovers positively affect
the export capacity and export intensity of industrial enterprises in the considered periods.
The result reveals that China’s remarkable manufactured export growth can be attributed to
embodied technological spillovers from FDI and China’s integration into world trade. In terms
of magnitude, model 1 presents that a one percent increase in FDI enhances the export Domestic vs
capacity and export intensity of enterprises by 0.45 and 0.40% respectively. Further, a one foreign R&D
percent increase in trade volume improves export capacity and intensity by 0.58% and 0.24%
respectively (see Tables 2 and 3). The findings are validated in theory which postulates that
and export
embodied knowledge spillovers originating from different activities of foreign enterprises,
firms’ exposure to the international market and the import of machinery and equipment
embodying advanced technologies positively influence export performance (Pierola et al.,
2018; Liu and Buck, 2007). Our results are in line with that of Yu et al. (2022), Wang et al. (2020)
and Anwar and Sun (2018).
Further, it is interesting to note that the coefficients of FDI and Trade variables are either
statistically more significant or have a greater magnitude than R&D and Patent variables
across all the estimated models presented in Tables 2 and 3. It reveals that spillovers
associated with embodied knowledge have a relatively stronger impact on export capacity
and export intensity of enterprises than internal R&D efforts. This result is crucial because a
recent debate in emerging countries seeks to identify the more effective channel of technology
diffusion for efficient resource allocation and a decent catch-up strategy (Krammer, 2014).
The estimated coefficient of the DIS_Knowledge variable is positive but insignificant in
most of the models provided in Tables 2 and 3, which does not support H2b. The result
suggests that disembodied knowledge does not directly promote export capacity and export
intensity of enterprises in emerging countries. The possible reason is that the adoption of
external technology requires a meaningful internal R&D capability. The literature confirms
that a sizeable absorptive capacity and a variety of types of internal R&D activities are
required to absorb and assimilate the external technology especially acquired from developed
countries (Krammer, 2014; Li, 2011). External technology is complex and difficult to
internalise, while enterprises in developing countries can use less complicated and labour-
using technologies (Wang and Li-Ying, 2014). It highlights the role of the interaction between
internal R&D and foreign knowledge spillovers in export performance. We test the joint effect
of internal R&D and foreign technology licensing by including an interaction variable that
links disembodied knowledge to internal R&D (R&D 3 DIS_Knowledge). A positive and
significant coefficient on the R&D 3 DIS_Knowledge variable is found for the considered
period in all the estimated models (see Tables 2 and 3), confirming that a threshold level of
internal R&D capacity is necessary to adopt foreign technology. The finding suggests that
the decision for licensing external technology should be seen in the context of prior related
knowledge and the innovation capability of domestic enterprises. It is interesting to note that,
DIS_Knowledge shows a positive and significant impact on export intensity in models 1–3 (i.e.
main sample). The possible reason may be that, owing to the scientific and technological
development policies of the Chinese government since the mid-1990s, the innovation
capability of the domestic enterprises has enhanced, the skill to adopt foreign technology has
improved and the gap from the world technological frontier has decreased over years (Rauf
et al., 2021).
The coefficients on the State 3 Private variable are positive and statistically significant,
suggesting that the interaction between public and private partnership in an industry
positively affect the export capacity and export intensity of enterprises. Thus, H3 is
confirmed. The theory reveals that public policy set motivation and incentives for exporting
while private ownership interacts with state ownership to overcome inefficiencies and
undergo efficient allocation of scarce resources (Chen et al., 2021; Yi et al., 2013). It is important
to note that State 3 Private show a positive but insignificant impact in our second panel
which includes a shorter period from 2000 to 2010. The possible reason is that the public–
private collaboration was relatively weak in the early reform period. The positive and
significant results of the main panel which includes the recent period postulate that public–
private collaboration has improved over the years. In this regard, the role of undergoing
IJOEM market-oriented reforms and the policies to reduce inefficiencies associated with SOEs has
been critical (Chen et al., 2021).
Discussing the results of our control variables, we find that the estimated coefficient of the
Size variable is positive and significant in all models except models 1–3 of Table 3 where the
coefficient is also positive but insignificant. It confirms a positive impact of the size of
the industry on export capacity and export intensity of enterprises. The result report that
industrial enterprises may experience economies of scale to better use their comparative
advantage in the world market. Furthermore, the coefficients on the Human Capital variable
are positive for export intensity and negative for export capacity but insignificant and
inconsistent in different models provided in Tables 2 and 3. The possible reason is that we
proxy the variable using high-quality human capital while the share of scientists, engineers
and S&T experts in total employment is still low in the Chinese industrial enterprises. Below a
minimum level, the impact of human capital may be insignificant or even negative (Wang
et al., 2020). The result is in line with (Rauf et al., 2021), among others.
The following points can be discerned easily from the above discussion. First, domestic
and foreign R&D expand the export capacity and export intensity of industrial enterprises,
confirming that R&D activities influence export performance via multiple channels. Second,
our estimates suggest the greater impact of embodied knowledge spillovers from FDI and
trade on export than that of domestic R&D. It reveals that opening up for foreign investment
and integration into world trade is a relatively more significant way of export upgrading in
developing countries lacking domestic R&D capability. Third, we do not find the direct effect
of the licensing of foreign technology on export performance. Instead, the results show that
the effect of disembodied knowledge spillovers on export is contingent upon internal R&D
capacity. It concludes that firms in emerging countries need to conduct meaningful internal
R&D to adopt and internalise the technologies acquired from advanced countries. Fourth, in
general, a comparison of the results in different periods shows that the sign and significance
of the variables on internal R&D and the embodied knowledge channels remain unchanged
while the significance of the disembodied knowledge and public–private collaboration
variables has relatively improved in the main panel which includes the recent period. The
results reveal that the effect of disembodied knowledge and public–private collaboration on
export has been improved. The possible reason is that the innovation capability of Chinese
industrial enterprises has been enhanced over years (Rauf et al., 2021).

4.1 Sensitivity analysis

Specific tests and sensitivity checks should be conducted for robustness. To overcome the
problem of cross-equation correlation between residuals, we re-estimate equations (3) and (4)
using IV-3SLS method. The estimated results of IV-3SLS regressions for both panels are
provided in Tables 4 and 5.
The estimates reported in models 1–5 are in line with the IV-2SLS estimates presented in
Tables 2 and 3 except the coefficients of the FDI variable which becomes insignificant in
Model 1 of Table 4 and the DIS_Knowledge variable which becomes insignificant in Model 2
and 3 of Table 5. It confirms that the results are broadly consistent with the preceding
findings. Further, we also compare our results with the RE estimates. This selection is based
on the statistic of the Hausman specification test which fails to reject the null hypothesis of a
RE estimation. The RE estimates provided in Tables 6 and 7 are also in line with the results
based on IV methods except the coefficient of the STATE 3 PRIVATE variable which
becomes significant in Model 3 of Table 4 only. It confirms that our results are robust to
changes in estimation methods as well. While explaining these results, Models 1–5 examine
that internal R&D effort, embodied knowledge spillovers from FDI and trade and public–
private collaboration positively affect the export capacity and intensity of industrial
 Main 2000–2010
Domestic vs
(1) (2) (3) (4) (5) foreign R&D
and export
Constant 0.336 1.152*** 0.108 0.222 2.330***
(0.357) (0.414) (0.377) (0.587) (0.584)
R&D 0.054** 0.158*** 0.077**
(0.022) (0.044) (0.035)
Patent 0.193*** 0.130*** 0.254***
(0.028) (0.022) (0.038)
FDI 0.217 0.483*** 0.261* 0.243* 0.284**
(0.196) (0.096) (0.145) (0.137) (0.136)
Trade 0.945*** 0.890*** 0.878*** 0.897*** 0.884***
(0.023) (0.022) (0.022) (0.041) (0.035)
DIS_Knowledge 0.019 0.003 0.016 0.097*** 0.025
(0.019) (0.024) (0.025) (0.028) (0.048)
State 3 Private 0.113** 0.131*** 0.113**
(0.050) (0.030) (0.052)
R&D 3 DIS_Knowledge 0.055*** 0.038*** 0.036***
(0.008) (0.008) (0.013)
Size 0.859*** 0.945*** 0.916*** 0.977*** 0.955***
(0.048) (0.042) (0.047) (0.052) (0.062)
Human Capital 0.111*** 0.023 0.174*** 0.177*** 0.144***
(0.035) (0.022) (0.055) (0.046) (0.036)
Period effect Yes Yes Yes Yes Yes
No. of Obs. 621 621 621 297 297
Overall R-Squared 0.834 0.841 0.848 0.801 0.821
Table 4.
Note(s): Standard errors are in parenthesis Panel IV-3SLS
* Significance level of 10% estimates (dependent
** Significance level of 5% variable: export
*** Significance level of 1% capacity)

enterprises in emerging countries. Also, the results suggest that the acquisition of technology
from advanced countries may not directly benefit the export of domestic enterprises but
requires rich internal innovative capacity.

5. Conclusions and policy implications

Technological innovation plays a critical role in the creation of a robust outward pattern of
economic development. This phenomenon has extensively been examined within the
framework of innovation, trade and development (Romer, 1990). Previous studies show that
countries’ competitive position in the international market is contingent upon the process of
knowledge creation in them through domestic and foreign R&D efforts (Aw et al., 2008;
Griliches, 1991). However, the literature shows that this process is complicated having
individual differences at the firm, sector and industry levels. It also depends upon the nature
and sources of technology. Although the theoretical arguments provide several channels
through which technological innovation affects export, empirical validation of this
relationship is scarce. Further, the impact of the diverse channels of domestic and foreign
R&D on export is assessed in isolation by previous studies.
This paper intends to utilise a unified empirical framework to assess the relative
importance of three diverse channels of domestic innovation and foreign R&D spillovers
including internal R&D, embodied knowledge and disembodied knowledge for the export
capacity and intensity of industrial enterprises in emerging countries. The empirical analysis
is based on a rich panel of China’s industrial enterprises in the manufacturing sector for the
IJOEM Main 2000–2010
(1) (2) (3) (4) (5)

Constant 10.545*** 10.271*** 11.481*** 10.574*** 9.274***

(0.492) (0.581) (0.580) (0.594) (0.675)
R&D 0.145* 0.464*** 0.257**
(0.074) (0.085) (0.115)
Patent 0.117*** 0.072** 0.078**
(0.038) (0.036) (0.041)
FDI 0.666** 0.627*** 0.681** 0.398 0.746***
(0.311) (0.149) (0.314) (0.296) (0.166)
Trade 0.766*** 0.745*** 0.729*** 0.780*** 0.813***
(0.029) (0.030) (0.027) (0.041) (0.040)
DIS_Knowledge 0.197*** 0.018 0.047 0.184*** 0.050
(0.032) (0.034) (0.033) (0.038) (0.052)
State 3 Private 0.140* 0.088 0.297***
(0.075) (0.078) (0.068)
R&D 3 DIS_Knowledge 0.094*** 0.090*** 0.059***
(0.011) (0.011) (0.014)
Size 0.336*** 0.278*** 0.286*** 0.234*** 0.282***
(0.076) (0.061) (0.077) (0.080) (0.070)
Human Capital 0.453*** 0.620*** 0.202** 0.156 0.530***
(0.088) (0.032) (0.096) (0.140) (0.042)
Period effect Yes Yes Yes Yes Yes
No. of Obs. 621 621 621 297 297
Overall R-Squared 0.699 0.732 0.748 0.787 0.769
Table 5.
Panel IV-3SLS Note(s): Standard errors are in parenthesis
estimates (dependent * Significance level of 10%
variable: export ** Significance level of 5%
intensity) *** Significance level of 1%

period from 1998 to 2020. Further, the IV-2SLS regression method is employed to control for
the possible endogeneity bias and the sensitivity of estimates is checked by applying the
IV-3SLS and RE methods. The results are summarised below.
Results of the study show that internal R&D efforts and embodied knowledge spillovers
from FDI and trade have positively affected the export capacity and export intensity of
enterprises during the considered period. Particularly, we report that embodied knowledge
spillovers have a relatively stronger impact on export than internal R&D efforts, suggesting a
relatively significant effect of external technology spillovers on export performance in
emerging countries. Further, disembodied knowledge that is acquired through licensing of
technology from advanced countries does not directly contribute to exporting and requires a
threshold level of internal R&D capability. This result reports that enterprises in developing
countries should cautiously select technologies when acquiring as well as they should
conduct meaningful internal R&D to adopt and internalise the external technology.
Moreover, the public–private collaboration has a positive effect on export performance and
the impact has improved in recent years.
The findings of the paper suggest some policy lessons. Internal R&D activities are critical
for the astounding export performance of industrial enterprises in emerging countries. These
countries can achieve a competitive advantage for their products through a variety of types of
R&D efforts. An increase in R&D share to GDP is crucial for a strong innovation capability
and export competitiveness. In this regard, “National Innovation-Driven Development
Strategy Outline” which aims at enhancing endogenous innovation by spending as high as
 Main 2000–2010
Domestic vs
(1) (2) (3) (4) (5) foreign R&D
and export
Constant 3.621*** 5.040*** 3.734*** 3.633*** 4.411***
(0.677) (0.688) (0.734) (0.904) (0.931)
R&D 0.100** 0.156*** 0.164**
(0.047) (0.052) (0.079)
Patent 0.098*** 0.095*** 0.102**
(0.029) (0.029) (0.051)
FDI 0.391*** 0.437*** 0.398*** 0.330** 0.415***
(0.061) (0.060) (0.060) (0.149) (0.129)
Trade 0.559*** 0.529*** 0.563*** 0.499*** 0.548***
(0.035) (0.035) (0.035) (0.154) (0.142)
DIS_Knowledge 0.001 0.018 0.021 0.006 0.043*
(0.015) (0.017) (0.017) (0.019) (0.024)
State 3 Private 0.082*** 0.072*** 0.095***
(0.023) (0.023) (0.035)
R&D 3 DIS_Knowledge 0.014* 0.023*** 0.030*
(0.008) (0.009) (0.016)
Size 0.475*** 0.491*** 0.488*** 0.473*** 0.461***
(0.065) (0.063) (0.064) (0.071) (0.079)
Human Capital 0.128*** 0.087** 0.151*** 0.094
(0.047) (0.035) (0.048) (0.087)
Period effect Yes Yes Yes Yes Yes
No. of Obs. 621 621 621 297 297
Overall R-Squared 0.767 0.771 0.791 0.706 0.734
Note(s): Standard errors are in parenthesis Table 6.
* Significance level of 10% Panel RE estimates
** Significance level of 5% (dependent variable:
*** Significance level of 1% export capacity)

2.8% of GDP on R&D by 2030 and accelerating foreign technology transfer is a useful
strategy. Further, embodied and disembodied knowledge spillovers are critical for
developing countries to narrow down the technology gap with advanced countries and
accelerate export performance. The acquisition of external technology may provide a
conducive environment to speed up the formation of a competitive outward pattern of
economic development. However, the selection of the appropriate technology to be acquired is
critical in this regard. Developing countries are capable of learning from labour-using
technologies because they possess relatively abundant labour. Thus, the decision of
importing or licensing technology from advanced countries should be seen in the light of prior
related knowledge and internal R&D capability. In this regard, the role of the complementary
between domestic and foreign R&D efforts in export is required to be discussed in
development agendas. Further, the “China 2030” plan which focuses on further reforms of
SOEs and the development of private sector may encourage export performance via
extending the public–private collaboration.
The study has some limitations. We have investigated the impact of the different channels
of technology on export, but we have not studied the impact of these channels on overall
imports. Assessing the determinants of imports are particularly important in emerging
countries. Further, the study examines the effect of overall R&D on the export performance of
enterprises, however, future studies may explore the effect of different kinds of R&D
including basic research, applied research and experimental development on industrial
export separately. This is critical to separate the “research” and “development” components
of R&D and to explore their unique impact on trade. Studies can also assess the impact of the
IJOEM Main 2000–2010
(1) (2) (3) (4) (5)

Constant 6.287*** 3.518*** 6.473*** 6.030*** 4.983***

(0.763) (0.801) (0.814) (1.162) (1.206)
R&D 0.253*** 0.358*** 0.174**
(0.051) (0.056) (0.087)
Patent 0.121*** 0.115*** 0.151***
(0.033) (0.031) (0.058)
FDI 0.310*** 0.403*** 0.330*** 0.208 0.340**
(0.066) (0.068) (0.065) (0.170) (0.163)
Trade 0.262*** 0.189*** 0.268*** 0.334** 0.376***
(0.039) (0.040) (0.038) (0.138) (0.132)
DIS_Knowledge 0.041** 0.068*** 0.074*** 0.004 0.047*
(0.016) (0.019) (0.018) (0.022) (0.027)
State 3 Private 0.176*** 0.166*** 0.127***
(0.025) (0.025) (0.035)
R&D 3 DIS_Knowledge 0.018** 0.039*** 0.028
(0.009) (0.009) (0.018)
Size 0.015 0.014 0.011 0.299*** 0.276**
(0.072) (0.074) (0.070) (0.100) (0.113)
Human Capital 0.025 0.120*** 0.009 0.201*
(0.051) (0.040) (0.051) (0.112)
Period effect Yes Yes Yes Yes Yes
No. of Obs. 621 621 621 297 297
Overall R-Squared 0.587 0.591 0.640 0.539 0.571
Table 7. Note(s): Standard errors are in parenthesis
Panel RE estimates * Significance level of 10%
(dependent variable: ** Significance level of 5%
export intensity) *** Significance level of 1%

ownership structure of enterprises on their export performance because the availability of

resources is different in firms with different ownership statuses.

Note
1. This paper assesses the direct effect of public–private collaboration on export performance. It can
also be noted that the state-owned and private enterprises may have different R&D patterns and
innovation activities in them may have different repercussions for export. The studies in future may
explore the indirect effect of ownership structure of firms on their export performance via its
interaction with technological innovation. We are thankful to the anonymous reviewer for
highlighting this relationship.

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Further reading
Ito, K. and Pucik, V. (1993), “R&D spending, domestic competition, and export performance of
Japanese manufacturing firms”, Strategic Management Journal, Vol. 14, pp. 61-75.
OECD (2014), Science and Technology Industry Outlook, OECD, Paris.
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Technology Economics Research, Vol. 3, pp. 24-32, (in Chinese).

Corresponding author
Abdul Rauf can be contacted at: araufrao@gmail.com, arauf@ndu.edu.pk

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