The impact of innovations on the export performance of Saudi small and medium-sized enterprises

Purpose: This paper aims to examine the effects of innovation activities (product and process innovations) on the export performance of Saudi small and medium-sized enterprises (SMEs). Furthermore, this paper compares and contrasts the Saudi innovation model against Dubai and Singapore. Design/methodology/approach: This study controls for the endogeneity of innovation activities and export performance by using firm-level data from the 2023 World Bank Enterprises Survey for Saudi SMEs. Findings: Data suggest that there is a relatively low innovation level among Saudi firms. However, their exports are characterized by high innovation activity. This study demonstrates that when considering product and process innovation independently, they positively influence exporting decisions. However, when considering the interdependence between the two types of innovation activities, only process innovation increases the likelihood of exports, and there is no robust evidence of product innovation’s impact on export decisions. Finally, this study shows that Saudi Arabia, Dubai and Singapore will develop their innovation model, given the structural differences between these economies. Originality/value: To the best of the authors’ knowledge, this is the first paper to study the impact of product and process innovations on the export performance of Saudi SMEs using firm-level data. Moreover, it compares innovation models between Saudi Arabia, Dubai and Singapore, given their different governmental institutions and socio-cultural fabric.