Export Market Diversification and Innovation Capability of Chinese Firms: the Moderating Effect of Export Product Diversification

Taking advantage of the datasets of China Industrial Enterprises and China's Trade Statistics during 2004-2006, this paper examines the impact of export diversification strategy on Chinese firms' innovation capability, and explores different roles of export market diversification and export product diversification. The results show that, the degree of export market diversification has significant positive impact on Chinese firms' innovation capability. And the export product diversification positively moderates the relationship between the degree of export market diversification and Chinese firms' innovation capability. These findings have important implications for Chinese firms to implement export market and product diversification strategy, so as to enhance their innovation capability.