Innovation Activities and Export Performance of Canadian Small and Medium-Sized Agri-Food Firms

Canadian small and medium-sized firms face two major challenges, namely, that of innovation in supporting their growth and improving their competitiveness and that of access to international markets. The objective of this study is to analyze the impact of research and Development (R&D) investment on the export performance of Canadian agri-food companies and on that of related sectors, namely, the textile and clothing sector and the manufacture of leather goods and similar products. We used impact assessment methods to analyze the effects of firms' innovation activities on their export performance. First, we analyzed explanatory factors for R&D expenses; second, we analyzed the impact of R&D on extensive (market access) and intensive (trade value) margins of trade. In doing so, we used Statistics Canada's National Accounts Longitudinal Microdata File (NALMF) for 2010 to 2015, which is coupled with the Trade by Exporter Characteristics (TEC) database. The size of firms and their support from the Canadian government affect their propensity to invest in R&D, the value of R&D expenses and their intensity, as measured from the ratio of R&D to sales of goods and services. Overall, our results show that investment in R&D has a positive impact on the export performance of agri-food SMEs. 

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