Innovation Voucher Thresholds and Export Entry Among Entrepreneurial Manufacturing Firms in Turkey

Abstract

Entrepreneurial manufacturing firms in middle-income economies often face a practical difficulty: they must innovate before they have accumulated stable export relationships, yet export entry itself may be necessary for learning, scale, and reputational improvement. This paper studies whether small innovation vouchers alter the export trajectories of young manufacturing firms in Turkey. The analysis uses a constructed firm-level dataset of 1,124 Turkish entrepreneurial manufacturing firms observed from 2015 to 2022. The empirical design exploits a grant-evaluation score cutoff that determines eligibility for a voucher supporting prototype testing, certification, laboratory services, and design adaptation. Because some firms above the cutoff do not receive funding and some below the cutoff later obtain support through reallocation, the main identification strategy is a fuzzy regression discontinuity design. The study supplements this design with local randomization inference, manipulation tests, covariate balance tests, Poisson pseudo-maximum likelihood models for export shipment counts, accelerated failure-time models for export-entry timing, and distributional treatment-effect estimates. The results indicate that voucher receipt increases the probability of first export entry within twenty-four months by 8.6 percentage points near the cutoff. Treated firms also record 18.4% more export shipments and reach foreign customers 3.7 months earlier. Effects are stronger among firms with prior prototype completion and weaker among firms whose founders have no technical background. The evidence suggests that modest innovation support can influence internationalization when it removes specific commercialization bottlenecks rather than broadly subsidizing undirected research effort.