Scientific Research and Experimental Development (SR&ED) and Exporting
Financial benefit from the SR&ED program has enabled many companies to undertake continuing SR&ED activities, thus providing the means to advance their understanding of science and technology in their given fields and to increase their ability to compete within their industry sector.
This is a key factor for smaller companies that enter export markets. Analytical Studies Branch Research Paper Series Innovation and Export-market Participation in Canadian Manufacturing reports that "innovation associated with R&D is a key factor that increases the probability of firms entering export markets. These impacts extend from the type of R&D that qualifies for tax deductions because of its originality to the expenditures that make more marginal improvements to products and processes that are more common in smaller firms. These competencies are in turn further expanded in smaller firms at the time of entry, as new exporters increase the intensity of their extramural R&D. Exporting also increases the likelihood that firms, small or large, will subsequently invest in R&D, whether intramural or extramural."[1]
This is a key factor for smaller companies that enter export markets. Analytical Studies Branch Research Paper Series Innovation and Export-market Participation in Canadian Manufacturing reports that "innovation associated with R&D is a key factor that increases the probability of firms entering export markets. These impacts extend from the type of R&D that qualifies for tax deductions because of its originality to the expenditures that make more marginal improvements to products and processes that are more common in smaller firms. These competencies are in turn further expanded in smaller firms at the time of entry, as new exporters increase the intensity of their extramural R&D. Exporting also increases the likelihood that firms, small or large, will subsequently invest in R&D, whether intramural or extramural."[1]
"The learning-by-exporting literature and the literature that treats exporting and innovation as complements, point to innovation as a source of productivity gains ex post. Recent empirical evidence for Sweden shows that exporters are more productive firms that have succeeded in appropriating innovative outputs, compared with non-exporters (Jienwatcharamongkhol and Tavassoli 2014), pointing to the importance of innovation as a potential mechanism in the exporting-productivity relationship. Ito and Tanaka (2015) use a firm-heterogeneity model that forecasts a complementarity between R&D capabilities and exporting, and confirm the predictions of the model for Japanese firms ".[1]
"R&D investment is found to have a larger positive effect on future productivity than exporting, though jointly undertaking both activities has the largest impact".[1]