Innovation and Export Premiums: An Empirical Analysis of French Business Data

We analyse the relationship between innovation, productivity, and exports using a large database on French manufacturing firms. Our results show that corporate heterogeneity in innovation is a key determinant of export premiums. In other words, one of the reasons why French exporting firms are more productive than non-exporting ones is that they are more innovative. However, allowing for these gaps in innovation capability, we also show the persistence of residual premiums on the order of 3% for exporting firms. This finding suggests that the link between productivity and export performance is based on other factors, perhaps connected to exporting firms’ specific managerial and entrepreneurial skills.