Learning by exporting: How exports drive innovation in a developing country?

Purpose This study aims to investigate the causal impact of exports on firm-level innovation in Vietnam, focusing on how participation in international markets shapes both product and process innovation in an emerging economy context. Design/methodology/approach The study uses firm-level data from the World Bank Enterprise Surveys spanning 2005–2023 and an instrumental variable (IV) probit model to address potential endogeneity and identify the causal effect of exports on innovation. Findings The results show that exporting firms are significantly more likely to engage in innovation, with a stronger and more robust effect on process innovation than on product innovation. This pattern suggests that firms primarily upgrade through efficiency improvements, quality enhancement and compliance with international standards, consistent with Vietnam’s position in low- to medium-technology segments of global value chains. The effects are heterogeneous across firms. Export-induced innovation is stronger among large firms and among domestic and private firms, whereas the effect is more limited for foreign-owned firms. In addition, although female-led firms exhibit higher innovation performance, they derive smaller innovation gains from export participation than male-led firms. Research limitations/implications Although the study provides robust evidence from Vietnam, the findings may be context-specific. Policy implications include promoting export facilitation, enhancing SMEs’ absorptive capacity, implementing sector-specific strategies based on ownership structures and reducing structural barriers that limit the ability of female-led firms to benefit from export-related learning. Originality/value This study contributes to the literature by providing causal firm-level evidence on the export–innovation nexus in a developing economy. The findings highlight the conditional nature of learning-by-exporting and underscore the central role of process innovation as a key channel for technological upgrading in emerging markets.