Complementarity among innovations for exporting in German manufacturing firms

This paper investigates whether firms’ joint implementation of product, process and organizational innovation may foster their propensity of exporting. We study the relationship of complementarity among innovation practices when exporting is the firms’ objective function, through the properties of supermodular functions. We propose a unified strategy to perform multiple inequality testing implied by the properties of supermodular functions. Bootstrapping is used when innovation variables are exogenous. When endogeneity of binary variables cannot be rejected complementarity is checked through propensity score matching and instrumental variable methods. Using data from CIS4, heterogeneous incentives of exploiting complementarity among German manufacturing firms’ innovation practices emerge by export destinations and when size specific conditions are satisfied.