Innovation Impact on Export Success | Free Essay Example

Innovation Impact on Export Success

Words: 862
Topic: Business & Economics
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Introduction

The approaches behind a company’s competitiveness and global triumph have at all times attracted the focus of a huge set of business and economics studies. In this regard, the innovation endeavors of a company might represent the major course stimulating the organization’s venture in foreign markets. The comprehension of the returns to innovation about the endeavors of a company in foreign markets becomes considerably pertinent from the viewpoint of a rising economy.

Innovation, certainly, is mainly expensive for developing nations because of their restricted labor force and technological endowment. Nevertheless, for such markets, the exports from innovation activities in other nations offer an unparalleled opportunity since it favors the utilization of scale economies, transfer of expertise, and the learning of new potential (Lo Turco & Maggioni 2015). This study seeks to add to this subject through the dissection of the influence of innovation on exports in Turkish companies. The innovative efforts carried out by companies are effective in the promotion of their presence in foreign markets.

How Innovation Influences Exports

The manufacturing of new products that are customized to the needs of the consumers in the intended markets plays a vital role in easing companies’ access to such marketplaces (Filipescu et al. J 2013). The initiation of new production practices might significantly decrease the operational outlays and boost the capacity of companies to manage export costs and take their products to markets in foreign countries.

In the discussion of the influence of innovation on exports amid Turkish companies, a wide pool of studies takes into consideration both supply and demand. To start with, there is a need to separate the model progression and innovation from their shared adoption (Akman & Yilmaz 2008). Secondly, through modeling the endogenous options of companies concerning technology that pursues trade liberalization, there is an inclination towards modeling the influence of taking up the innovation of the export propensity of the firms.

Innovation coupled with research and development is a major aspect of the development of companies and the advancement of the economy. Studies have established that innovation results in high levels of trade openness, which is valuable for the lasting growth of nations. Companies that spend more on innovation have a high likelihood of exporting more than the ones that do not (Aristei, Castellani & Franco 2013).

Both innovation and exports have a mutual impact on the advancement in the productivity of Turkish companies. Nevertheless, major contributions depend on the dissimilar approaches that companies use for process and product innovation that gives room for an enhanced pattern of possibilities in the connection involving innovation and exports. For a standard monopolistic competition structure, the major innovativeness occurs in the research and development of products and processes. In this regard, the research and development of products and processes act as a starting position of the empirical policy that stimulates profitability regardless of a further fixed outlay to facilitate the application of innovative strategies that boost exports.

While innovation strategies seek to influence increased profitability positively through the decrease in the marginal production outlay, the initiation of novel products enables companies to shift to the generation of high-quality variety in a bid to take part in enhanced export endeavors. This supports the notion that big and more productive companies have a high possibility of innovating and that innovators are highly probable of exporting (Silva, Afonso & Africano 2012; Chen 2013).

It is also evident from Turkish companies that with the consideration of the two dissimilar channels through which innovation influences profitability amid innovators, the ones that take part in the innovation of both products and processes have a higher ability to export when judged against one-way innovators.

Whereas process innovation has a high likelihood of happening when the costs of labor are high and imports from low-income nations low, product innovation has a high probability of occurring when companies intensively take part in research and development. Process and product innovation just enhance exports when they mutually occur, and markets in foreign countries are developed (Efrat 2014). Innovation endeavors in Turkish companies are significant in the preservation of their position in export markets.

Also, the innovation of products seems to be more rewarding concerning the facilitation of exports when judged against the innovation of processes, particularly in low-income nations whereas a combined involvement of the two has the most considerable influence on the export propensity, particularly in high-income countries. Policymakers should seek to uphold the innovative practices of companies to enhance their competitiveness in global markets, particularly to ease their access to developed economies (Boso et al. 2013).

Conclusion

The conception of the returns to innovation concerning the endeavors of a company in foreign markets becomes noticeably pertinent from the view of a rising economy. Innovation is principally expensive for developing nations because of their restricted labor force and technological developments. Nonetheless, through the dissection of the influence of innovation on exports in Turkey, this study makes it evident that the innovative efforts implemented by companies are triumphant in the promotion of their success in foreign markets. Policymakers should support the innovative practices of companies to improve their competitiveness in global markets, mostly to ease their access to developed economies.

Reference List

Akman, G & Yilmaz, C 2008, ‘Innovative capability, innovation strategy and market orientation: An empirical analysis in Turkish software industry’, International Journal of Innovation Management, vol. 12, no. 1, pp. 69-111.

Aristei, D, Castellani, D & Franco, C 2013, ‘Firms’ exporting and importing activities: Is there a two-way relationship?’, Review of World Economics, vol. 149, no. 1, pp. 55-84.

Boso, N, Story, V, Cadogan, J, Micevski, M & Kadic-Maglajlic, S 2013, ‘Firm innovativeness and export performance: environmental, networking, and structural contingencies’, Journal of Marketing Research, vol. 21, no. 4, pp. 62-87.

Chen, W 2013, ‘The extensive and intensive margins of exports: The role of innovation’, The World Economy, vol. 36, no. 5, pp. 607-635.

Efrat, K 2014, ‘The direct and indirect impact of culture on innovation’, Technovation, vol. 34, no. 1, pp. 12-20.

Filipescu, D, Prashantham, S, Rialp, A & Rialp, J 2013, ‘Technological innovation and exports: Unpacking their reciprocal causality’, Journal of International Marketing, vol. 21, no. 1, pp. 23-38.

Lo Turco, A & Maggioni, D 2015, ‘Dissecting the impact of innovation on exporting in Turkey’, Economics of Innovation and New Technology, vol. 24, no. 4, pp. 309-338.

Silva, A, Afonso, O & Africano, A 2012, ‘Learning-by-exporting: What we know and what we would like to know’, The International Trade Journal, vol. 26, no. 3, pp. 255-288.