No. 37

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Export and Innovation in Companies: A Comparative Study of Transitional Countries

04 June 2018

Studies

RiTo No. 37, 2018

  • Kadri Männasoo

    Professor, Director of School of Business and Governance, Department of Economics and Finance, Tallinn University of Technology

  • Helery Tasane

    Helery Tasane

    Early Stage Researcher, PhD student, Tallinn University of Technology

  • Indrek Viires

    Indrek Viires

    Master's student, Tallinn University of Technology

Sustainable growth in the European transitional economies is based on the international competitiveness of companies and their position in the global value chain.

Research literature presents strong evidence that openness to foreign markets supports economic growth. However, under the conditions of limited labour force and capital, increasing of export volumes alone does not ensure long-term growth, and the capability to increase the added value of export will become the key factor. In modern economy, the creation of added value depends on the level of technological development and innovation, which in turn is influenced by business environment, existence of qualified labour and the availability of stable financing. Several studies have pointed out that in comparison to the companies targeted at domestic market, the exporters are larger, more productive and more innovative. This research focuses on explaining the connections and impact factors between innovation and export in the companies of Russia and the European transit economies. The key question is whether innovation brings along export activities, or whether the knowledge and experience obtained from export are the factors that create the necessary preconditions for innovation. Besides that, the article deals with the factors that increase or hinder the readiness of the companies in transitional countries to export and innovate. The study is based on synthesis of research literature, describes the data graphically and conducts an original econometric analysis by two different evaluation methods. The results of the analysis correspond to the information of earlier research literature, and also provide additional perspectives. First of all, the study points out that for the European transition economies, learning from export is a necessary precondition for innovation, and whereas the readiness for export can be explained by the company-based indicators reflecting financial capability and effectiveness, the emergence of innovation requires additional qualitative, dynamic and business environment based conditions. Establishing of conditions supporting the creation of added value is of key importance for changing the business environment and stimulating the companies in the way that stimulates them to contribute to higher creation of value in the international competition.

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