Home country institutions and exports of firms in transition economies: Does innovation matter?

Abstract

We draw on institutional theory and the resource-based view to analyze the relation between home-country governance imperfections and the export intensity of firms in transition economies, including an examination of the moderating role of innovation. We propose that greater governance imperfections result in lower export intensity and that innovation mitigates the constraints of operating with weak home-country institutions. Analyses of panel data from the Business Environment and Enterprise Performance Survey (BEEPS) on firms from transition economies provide support for our arguments. Our findings allow us to conclude that although firms from transition economies face difficulties to export due to the regulatory constraints of their home countries, a strategy based on innovation represents a viable way of overcoming these limitations.