Decision to export and decision to innovate: Empirical evidence on firm behaviour in CEECs and SEECs

Globalisation of economic activity requires from firms to engage in international competition as well as to search for new more efficient modes of competition through innovations. The decisions of firms to export and to innovate can be associated with wide range of factors and forces belonging to firm behaviour, characteristics of firms and features of their environment. The objective of this paper is to explore the major determinants behind these decisions of firms in several Central and East European Countries (CEECs) as well as their counterparts from South East European Countries (SEECs). A framework of seemingly unrelated regressions (SUR) is applied to the 2009 series firm-level data from Business Environment and Enterprise Performance Survey (BEEPS). To this end, the research assesses the differences in firm behaviour during current economic crisis between SEECs and CEECs, two groups of countries whose transition paths diverged over past decades. Also, within group of CEECs it distinguishes between firms in countries that joined European Union in 2004, Bulgaria and Romania who were admitted in 2007 and Croatia, the next EU member. The findings may provide basis for development of policy recommendations for improvements in the performance of firms in these countries.