Exporting, RD, and absorptive capacity in UK establishments

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 RD. 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 RD 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 RD no longer has an impact on exporting behaviour once we have taken into account its endogenous nature.