Is the degree of internationalization associated with the use of knowledge intensive services or with innovation?

•The use of external services for export activities is analysed in 804 Canadian manufacturing firms.•Exporters use more external services than non-exporters, and are also more innovative.•The results shows that exporters' use of external services is primarily associated with the fact that they are innovators, not with the fact they export.•Service use is therefore only indirectly associated with internationalization. This paper investigates the use of external business services by exporting manufacturing firms, and questions whether this use is connected to their innovation behaviour. We examine this issue by analysing the association between different types of innovation (product, process, management, and marketing) and internationalization, and the extent to which the use of these services for internationalization is moderated by the firm's level or type of innovation. Drawing on an original survey of 804 manufacturing establishments in Quebec, Canada, the results show that exporting establishments use a wider variety of KIBS, and are more innovative than non-exporters. Although both innovation and KIBS-use are associated with internationalization, only for innovation is the association unambiguous. After controlling for size, sector and age, there is no evidence that exporting manufacturers have more recourse to KIBS than non-exporters: they are, however, more innovative.