Innovation-Competition Linkage and Complementary Role of Learning by Exporting
The economic literature suggests that product market competition provides the incentive to innovate. To contribute to the existing literature, this paper suggests that Innovation-competition linkage can be complemented by export participation. Using firm-level data from the Centre for Monitoring Indian Economy, it is observed that the incentive to invest in innovations due to higher domestic competition is greater when firms have access to knowledge spillovers through exports. However, such an effect is present only when the competition allows for sufficient funds to invest in costly R&D projects.