R&D Expenditures and Geographical Sales Diversification

Christopher Baum, Mustafa Caglayan () and Oleksandr Talavera ()

No 794, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: This paper empirically examines the role of diversification in export markets on firm-level R&D activities. We show that geographical sales diversification across different regions of the world induces UK firms to increase their R&D expenditures, as firms must innovate and develop new products to maintain a competitive edge over their rivals. This finding is robust to a battery of sensitivity checks. Furthermore, we find no evidence of reverse causality between R&D and sales diversification.

Keywords: R&D investment; Export diversification; Foreign direct investment; Cash holdings (search for similar items in EconPapers)
JEL-codes: C24 G21 G32 (search for similar items in EconPapers)
Date: 2012-03-30, Revised 2012-11-12
New Economics Papers: this item is included in nep-cse, nep-ino, nep-int and nep-sbm
Note: Previously circulated as "R&D Expenditures and Export Sales Diversification"
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published, Manchester School, 84:2, 197-221, 2016

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Journal Article: R&D Expenditures and Geographical Sales Diversification (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:boc:bocoec:794

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