R&D Expenditure and Firms’ Exports: Does CEO Foreign Experience Matter?

This study explores the effect of R&D expenditure on firms’ exports and examines whether the CEO’s foreign experience moderates the nexus. Employing a large sample of 1,206 listed companies in China from 2012 to 2021, this study applies the fixed-effect panel regression to validate the relationship between R&D expenditure and the proportion of foreign sales to total sales. Further, the results are also checked for robustness using 2SLS instrumental variables (IV) and propensity score matching (PSM) to control endogeneity. Panel regression results reveal a significant effect of R&D expenditure on firms’ exports following the competitive advantage theory. The findings also show that CEOs with foreign experience can strengthen the competitiveness of Chinese firms in foreign sales, which supports the resource-based view. The heterogeneity test shows that R&D significantly improves the firm exports of non-state-owned, eastern region, and processing trade companies, due to policy pressures, locational advantages, and global value chain differences. The findings bear significant implications for policymakers, investors, and corporations endeavoring to comprehend the importance of innovation and human capital in international markets.