Exporting quality: is it the right strategy for the Italian manufacturing sector?

ABSTRACT: Recently, most European manufacturing firms have been engaged in a number of innovative activities to survive the growing competition coming from newly-industrialising countries. Italian manufacturing industry, which relies largely on SMEs, is struggling to regain competitiveness in global markets. In light of these stylised facts, we first investigate whether innovating activities and quality goods’ production enhance Italian SMEs’ probability to be exporter. Our findings suggest that both products’ quality and innovative activities affect considerably SMEs’ likelihood to export. Subsequently, using the Chow test, we find evidence for a structural break produced by quality, which results in substantial differences between high and low-quality firms. The former are more likely to export if they introduce product innovation, marketing innovation and/or organisational changes, the latter increase their chances of exporting when introducing process innovations and organisational changes.