Abstract

The need for the developing countries to boost exports and innovation raises the need for more empirical studies to clarify the relationship between innovation and exports, especially in the regions that have different characteristics compared to the rest of the country, where it is necessary to generate public policies to enhance their development. In this context, we find that, as the U-Model suggests, accumulated knowledge is the key to improve the firm exports, and thus, efforts should be directed, both from an institutional and managerial aspect, to create conditions for generating knowledge. We aim to study whether the U-Model applies to the firms of a specific context i.e., a developing market, as that one of Chile. Specifically, we want to confirm, as the sequential experiential U-Model predicts, whether the firm increases its export performance as it increasingly sells goods/services abroad to more distant markets and to a greater number of them (innovation of markets) since the cumulated knowledge increases. The research is based on longitudinal data of the total population of Regional Exporting Firms (N=84) of a specific region of Chile (La Araucanía). Secondary data is also used based on the National Customs Service of sales, products (8-digit tariff code) and markets over the period 2006-2011. A model of multiple linear regressions is used to analyze the relationships among variables. The findings of this study are useful for export policy-makers in developing countries. The study is focused on an analysis which is based on firm-level and longitudinal data. Departing from the very well-known and widely accepted U-Model (initially developed by the seminal work by Johanson & Vahlne of 1977), this study confirms the importance of accumulating knowledge, through market innovation when exporting and it considers the firms from a specific context i.e., a developing country such as Chile.