R&D intensity and productivity of exporting SMEs: empirical evidence from China

Scepticism in the R&D-productivity linkage among SMEs has arisen due to the belief that, by leveraging R&D capabilities through outsourcing and innovation alliances, an SME can achieve desirable innovation and business competitiveness without conducting in-house R&D activities of its own. Exporting SMEs have relatively limited internal resources but are exposed to more opportunities for R&D outsourcing and alliances across the world, so in-house R&D may appear even less appealing to them. But is in-house R&D truly no longer useful, particularly for exporting SMEs? Synthesising findings of extant studies on the effects of innovation and firm size on business productivity, this paper formulates an R&D-firm size-productivity research model for exporting SMEs. General linear model analysis on cross-sectional data of 186 exporting SMEs in China demonstrates that R&D intensity and firm size are positively and significantly associated with labour productivity. The findings of the study provide an additional piece of empirical evidence that to maintain technical leadership and business competitiveness, exporting SMEs need to strengthen their in-house R&D.